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CAFR 2017C A F R F T Y E S , City of Georgetown, Texas Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2017 Prepared by: Division of Finance and Administration Elaine S. Wilson, Controller Christi Rawls, Asst. Controller This page intentionally left blank. City of Georgetown, Texas Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2017 Table of Contents i Introductory Section (Unaudited) Letter of Transmittal .................................................................................................................................................... vi GFOA Certificate of Achievement ......................................................................................................................... xii Organizational Chart ................................................................................................................................................ xiv Elected Officials and Administrative Officers ....................................................................................................... xv City of Georgetown Map ........................................................................................................................................ xvi Financial Section Independent Auditor’s Report .................................................................................................................................. 3 Management’s Discussion and Analysis of Financial Condition and Results of Operations ........................................................................................................................................ 7 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position ........................................................................................................................................ 22 Statement of Activities ............................................................................................................................................. 23 Fund Financial Statements Balance Sheet – Governmental Funds .................................................................................................................. 26 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position ........................................................................................................................... 27 Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds ................................................................................................................... 28 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities ........................................................................ 29 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund .................................................................................................. 30 Statement of Net Position – Proprietary Funds ...................................................................................................... 31 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds ........................ 33 Statement of Cash Flows – Proprietary Funds ....................................................................................................... 34 Statement of Fiduciary Net Position – Agency Funds .......................................................................................... 35 Notes to Financial Statements ................................................................................................................................ 39 Required Supplementary Information Texas Municipal Retirement System Schedules and Ratios ................................................................................ 82 Other Post-Employment Benefits Schedules and Ratios ..................................................................................... 84 Modified Approach for Streets Infrastructure Capital Assets ............................................................................. 85 City of Georgetown, Texas Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2017 Table of Contents – Continued ii Combining and Individual Fund Financial Statements and Schedules Combining Financial Statements – Nonmajor Governmental Funds Combining Balance Sheet ...................................................................................................................................... 92 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance ..................................... 94 Schedules of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis Council Discretionary ......................................................................................................................................... 96 Conservation ...................................................................................................................................................... 97 Court Fees ............................................................................................................................................................ 98 Development ...................................................................................................................................................... 99 Fire ....................................................................................................................................................................... 100 Library Restricted .............................................................................................................................................. 101 Parks .................................................................................................................................................................... 102 PEG Fees ............................................................................................................................................................ 103 Police .................................................................................................................................................................. 104 Public Improvement Districts ........................................................................................................................... 105 Street Sales Tax .................................................................................................................................................. 106 Tax Increment Reinvestment Zones ............................................................................................................... 107 Transportation ................................................................................................................................................... 108 Tourism ................................................................................................................................................................ 109 Supplementary Individual Fund Financial Statements and Schedules – Major Governmental Funds General Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis ......................................................................................................... 112 Georgetown Transportation Enhancement Corporation (GTEC) Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis ......................................................................................................... 118 Debt Service Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis ......................................................................................................... 119 General Capital Projects Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis ......................................................................................................... 120 Combining Financial Statements - Nonmajor Proprietary Funds Enterprise Funds Combining Statement of Net Position ................................................................................................................. 123 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .................................... 124 Combining Statement of Cash Flows .................................................................................................................. 125 Internal Service Funds Combining Statement of Net Position ................................................................................................................. 126 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position .................................... 127 Combining Statement of Cash Flows .................................................................................................................. 128 Supplementary Individual Fund Financial Statements Agency Funds Statement of Changes in Assets and Liabilities .................................................................................................. 130 City of Georgetown, Texas Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2017 Table of Contents – Continued iii Statistical Section (Unaudited) Net Position by Component .................................................................................................................................. 134 Changes in Net Position ......................................................................................................................................... 136 Fund Balances of Governmental Funds .............................................................................................................. 140 Changes in Fund Balances of Governmental Funds ......................................................................................... 142 Property Tax Rates, Levies and Collections ......................................................................................................... 144 Assessed and Estimated Actual Value of Taxable Property ............................................................................ 146 Property Tax Rates - Direct and Overlapping Governments ........................................................................... 148 Principal Property Taxpayers ................................................................................................................................. 149 Taxable Sales by Category ................................................................................................................................... 150 Direct and Overlapping Sales Tax Rates ............................................................................................................. 152 Sales Tax Revenue Payers by Industry .................................................................................................................. 153 Ratios of Outstanding Debt by Type .................................................................................................................... 154 Ratios of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt per Capita ........................................................................................... 156 Computation of Direct and Estimated Overlapping Bonded Debt ............................................................... 158 Computation of Legal Debt Margin .................................................................................................................... 160 Revenue Bond Coverage - Utility Funds .............................................................................................................. 162 Utility System Condensed Statement of Operations ......................................................................................... 164 Utility System Condensed Statement of Operations ......................................................................................... 166 Demographic and Economic Statistics ............................................................................................................... 168 Principal Employers ................................................................................................................................................. 169 Full Time Equivalent City Government Employees by Function ....................................................................... 170 Operating Indicators by Functions ....................................................................................................................... 172 Capital Assets by Functions ................................................................................................................................... 174 Water Usage (Gallons) ........................................................................................................................................... 176 Ten Largest Water Customers ................................................................................................................................ 177 Daily Flow (Wastewater Treatment) ..................................................................................................................... 178 Ten Largest Wastewater Customers ..................................................................................................................... 179 Valuation, Exemptions and Ad Valorem Tax Debt ............................................................................................ 180 Taxable Assessed Valuations by Category ......................................................................................................... 182 Authorized but Unissued General Obligation Bonds ......................................................................................... 184 General Fund Revenues and Expenditure History ............................................................................................. 186 Municipal Sales Tax History .................................................................................................................................... 188 Monthly & Volumetric Water Rates ...................................................................................................................... 189 Monthly Wastewater Rates .................................................................................................................................... 190 Monthly Electric Rates ............................................................................................................................................ 191 Compliance Section Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................... 195 Independent Auditor’s Report on Compliance for Each Major Federal Program and on Internal Control over Compliance in Accordance with the Uniform Guidance ........................................ 197 Schedule of Findings and Questioned Costs ...................................................................................................... 199 Schedule of Expenditures of Federal Awards ..................................................................................................... 203 Notes to the Schedule of Expenditures of Federal Awards .............................................................................. 205 iv This page intentionally left blank. v Introductory Section vi February 28, 2018 Honorable Mayor and City Council, City Manager and Citizens of Georgetown, Texas: The comprehensive annual financial report of the City of Georgetown, Texas (the City) for the year ended September 30, 2017, is hereby submitted. The financial statements are presented in conformity with accounting principles generally accepted in the United States of America as set forth by the Governmental Accounting Standards Board (GASB) and have been audited by independent auditors in accordance with generally accepted auditing standards. Management Responsibility for Financial Information. The City’s Finance Division has prepared the report and is responsible for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures. To the best of our knowledge and belief, the enclosed data is complete and reliable in all material respects. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The Reporting Entity. This report includes all the funds of the City, as well as, the City’s discretely presented component unit, the Georgetown Economic Development Corporation (GEDCO), its Texas 4A economic development corporation. The City provides a full range of services, which include police and fire protection; construction and maintenance of streets and other infrastructure; recreational activities and cultural events. In addition to general government activities, the City also provides electric, wastewater, water, stormwater drainage and airport services which are included in the reporting entity. The City is also financially accountable for Georgetown Transportation Enhancement Corporation (GTEC), a Texas 4B economic development corporation, which funds transportation projects that enhance economic development within the City. GTEC is presented as a blended component unit within the reporting entity. Management Discussion and Analysis. Generally accepted accounting principles (GAAP) require management to provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the independent auditors’ report located at the front of the financial section of this report. DESCRIPTION OF THE CITY Georgetown is a Home Rule Charter City and operates under a Council - Manager form of government. A mayor, elected at large, and seven council members, elected from single member districts, serve staggered, three-year terms. Georgetown is located on Interstate 35, the major corridor between Dallas and San Antonio, at the intersection of State Highway 130. Georgetown was founded in 1848 with a strong agricultural base, in the heart of Williamson County, 26 miles north of Austin. Today, Georgetown has an estimated population of 60,642 within the city limits, with an estimated population of 88,047 inclusive of the extra-territorial jurisdiction (ETJ) and serves as the county seat of Williamson County. vii Georgetown’s economic development initiatives to diversify tax base, expand retail and create jobs have been balanced with a focus of maintaining the community’s unique character and quality of life. The downtown commercial district, with The Most Beautiful Square in Texas, continues to expand its arts, culture, dining and entertainment venues. Award-winning parks, extensive river trail systems along the North and South San Gabriel Rivers and Lake Georgetown have been leveraged with the low crime rate to make the City an attractive place to live and work. Georgetown is also home to Southwestern University, which continues to receive national recognition. The University has been named to Kiplinger’s list of the 100 best values in liberal arts colleges and has been noted as one of ‘America’s Best Value Colleges’ by the Princeton Review. With an average enrollment of 1500 students and 450 employees, the University provides substantial economic and cultural contributions to Georgetown. GEORGETOWN'S ECONOMIC OUTLOOK AND FINANCIAL CONDITIONS Economic Outlook Georgetown’s economy continued to grow during 2017, mirroring the strong development in the Austin metro region. Property values, sales tax revenue, and population increased in 2017. New single-family housing starts of 813 for the year continued to show the desirability for homes in the area. The City’s total assessed property total value has grown to over $7 billion, representing an increase of over 17.8% from last year. The average home value increased 6% to $253,320 in 2017. The assessed valuation has growth 68.9% over the past five years, which includes increases in existing values, as well as new property. The US Census named Georgetown in the top five fastest growing cities in America with a population over 50,000 for each of the last three years. 0.10 0.20 0.30 0.40 0.50 1,000,000,000 2,000,000,000 3,000,000,000 4,000,000,000 5,000,000,000 6,000,000,000 7,000,000,000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Assessed Value and Tax Rate Assessed Valuations Tax Rates viii 18.65 20.46 20.98 23.44 25.1 0 5 10 15 20 25 30 FY 13 FY 14 FY 15 FY 16 FY 17MillionsGeorgetownSalesTaxThe Austin area unemployment rate was 2.5% for December 2017, compared to 4.1% nationally. The Central Texas region continued to see strong growth in new jobs and in retail sales. The City’s commercial and job base continued to grow with the expansion of several small commercial and retail centers, as well as growth in the school district, county and city governments. Sales tax revenues increased 11.68% over the prior year, demonstrating solid growth in the local economy for the sixth consecutive year. The first quarter of the 2018 fiscal year continued this trend with sales tax receipts coming in 3.49% higher over the prior year. Two new major retail developments are in the planning stages, which will provide continued growth in this revenue stream. Holt Caterpillar broke ground in January 2018 on a 60,000 square foot regional Caterpillar equipment sales and repair facility. This $20 million investment is expected to create 129 new jobs and will have a $16 million impact to the City over the next 10 years. Sun City, Wolf Ranch Hillwood and the Summit at Rivery Park continue to expand single and multi-family living options, as well as increased restaurants and shops to support the residential demands. The City completed a Retail Strategy and Recruitment Plan in 2017 to identify ways to enhance the City’s tax base by increasing opportunities for retail businesses, and create a more diversified retail environment in Georgetown. In addition, the City’s Economic Development Department will use this plan to recruit and retain retail businesses to Georgetown. A workforce study was also completed, with the City’s targeted industries of professional services, life sciences and advanced manufacturing. These studies culminated into a complete economic development strategic plan centered around four goals: 1) Support of existing businesses and industries; 2) Enhance targeted recruitment of identified industries; 3) Diversify workforce development and recruitment initiatives; and 4) Encourage speculative development. INITIATIVES Mobility Improvements: Georgetown, like many growing cities, is investing in infrastructure to ensure mobility needs are met for the future. The Southwest Bypass, which at $20 million represents the City’s largest transportation project in history, is expected to open in early Summer 2018. The project was approved as part of a $105 million referendum that received 75% approval by voters in May 2015. This project partners with Williamson County to construct a north – south corridor designed to address mobility concerns and ensure connectivity. ix The Farm to Market 1460 project is set for completion in 2018 and expands two lanes to four lanes for a 3.5-mile segment to increase the capacity of the road. This project is a partnership with the Texas Department of Transportation to create an alternate parallel to IH35, as well as increase safety. Another major project for FY2017 was the completion of the extension of Mays Street, a partnership with the City of Round Rock to increase economic potential in the area, as well as improve mobility. This project was funded through the Georgetown Transportation Enhancement Corporation and through the creation of the South Georgetown Tax Increment Reinvestment Zone, initiated to provide infrastructure to drive economic expansion. Design and right of way acquisition was completed in 2017 for the extension of Rivery Boulevard from Williams Drive to Northwest Boulevard, with construction planned in 2018 as funding for the Northwest Boulevard bridge project becomes available through the Texas Department of Transportation. The improvements in this area will significantly alleviate traffic congestion on Williams Drive. In August 2017, the City launched a new fixed route bus system. Four routes provide service from 7am to 7pm Monday through Friday, and from 8am to 6pm on Saturdays, with the transit hub being at the Georgetown Public Library. Paratransit services are also offered. This program was made possible through strong partnerships with Capitol Area Rural Transportation System, CapMetro and the Georgetown Health Foundation. Utility Services: Growth in the residential and commercial sectors of Georgetown is sustainable due to innovative long range planning in the utility areas. In September of 2015, the City Spinning Spur 3 wind farm came online, with 97 turbines generating power. Located 50 miles west of Amarillo, Spinning Spur 3 is contracted to generate 144MW for the City for 20 years. The City also contracted with NRG Energy solar energy from a 154-megawatt photovoltaic (pv) solar project near Fort Stockton that will supply renewable energy to Georgetown through a 25-year purchased-power agreement that starts in July 2018. With these purchased power contracts in place, the City of Georgetown is poised to be only the second municipally owned utility to be 100% renewable by 2018. The investments in these purchased power contracts ensure the City can provide sustainable, renewable, and cost effective energy for decades to come. These new long-term contracts provide a hedge against carbon legislation costs. While short-term costs are forecasted to fluctuate, the long-term cost savings from fossil fuels are expected to provide cost savings to the growing community. The City completed the acquisition of the Chisholm Trail Special Utility District (CTSUD) in 2015 through the approval of the Public Utility Commission of Texas for the transfer of service areas. This consolidation provides for stronger regional water planning and resource management to support the continued future growth expected within the region, especially in the city’s northwestern growth corridors. x Garey Park groundbreaking Significant capital improvements, such as wastewater interceptors and water and wastewater plant expansions, are underway to continue to meet service demands for residential and commercial expansion. In addition, three elevated storage tanks are being constructed to help meet service demands: Sun City, Cedar Breaks and Braun. The City evaluated its contracted water and wastewater plant operations and developed a plan to move those services in house beginning October 1, 2016. This strategy is expected to generate a cost savings of over $5 million over the next five years. Georgetown takes an active role in water and wastewater planning with the Brazos River Authority (BRA) to find regional solutions to the ever-increasing demand for services, while protecting the natural environment within the area. Growth within the utilities continues to have strong positive impacts to the financial and economic conditions of Georgetown. Quality of Life. The City Council confirmed a new vision statement for the City: “Georgetown: A caring community honoring our past and innovating for the future”. The Council and staff strive to continue to exceed create places and conditions that make the community a special place to live with a high quality of life, as well as a great place to visit. Public Safety – Georgetown was ranked the third safest city in Texas with a population of over 50,000 by Safe Home. The Council continued its investments in quality of life for Georgetown residents through increasing resources towards Emergency Medical Service (EMS) program to ensure quality care and strong response times are met. The City is also planning for the future by designing its sixth fire station, which is funded by Emergency Services District #8, to ensure response in the western growth area. Land acquisition for fire station 7 began in 2017, with design to commence in 2018. These partnerships and investments ensure that growth demands do not negatively impact high quality emergency response. Award Winning Parks and Trail System - The San Gabriel Park is designated a Lone Star Legacy Park by the Texas Recreation and Parks Society due to its historic prominence within the community and the state. 200-year-old oak trees grace the park along the river, which runs through the heart of downtown. A master plan to renovate the park was developed in 2016, with the first phase of construction to be completed in 2018. The second phase is currently under design and is expected to begin this year, and will include a half-mile trail expansion. Future phases to expand the park uses will be developed as leases with non-profits utilizing parkland expire or are renegotiated. The largest donation in the City’s history was completed in 2004 when Jack and Cammy Garey announced they would donate their 525 acre ranch to the City for a future park, as well as $5 million towards the $15 million development cost. Construction broke ground in March 2017 to build trails, equestrian areas, day use areas and a dog park. The former Garey home is being renovated as a remarkable event destination. Garey Park is expected to open in early Summer 2018. 20,000 40,000 2013 2014 2015 2016 2017 Utility Customers Water Electric Wastewater Garbage xi Most Beautiful Town Square in Texas - The City sidewalk improvements at Founders Park on Church Street were completed this year, as well as a sidewalk from the parking lot at Martin Luther King Street and 8th Street to Rock Street. Founders Park renovations were completed, as well as renovations to the Grace Heritage Center, which will activate the downtown public space for community events. New development continues in the downtown area with the opening of small shops and cafes that further enhance the City’s historic old-town district. Blue Corn Harvest and Je Suis new businesses for 2017 and there are several major redevelopments underway that are expected to drive future economic impacts, including construction of the Watkins building, the Lofts on Rock and renovations to the historic Stromberg building. Long Range Planning. Planning for Georgetown’s future is a major priority, as the City formally adopted a new comprehensive plan in 2008 called the Georgetown 2030 Plan. This Plan provides vision for the future and is designed to address growth issues facing the community over the next 20+ years. This project required citizens throughout the community to provide the foundation for policies needed to ensure that the Georgetown of 2030 has the unique quality of life and economic vitality that it does today. An update of the Georgetown 2030 plan will be initiated in 2018 to provide opportunities for citizens weigh in on the city’s future development. FINANCIAL INFORMATION The City is responsible for establishing and maintaining internal controls designed to ensure that the assets of the City are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. The City’s Finance Director, Controller, and other key staff in the Finance Division design and maintain the internal control structure. These controls are under continual review by management, and under annual review by the independent auditors. During the year, the Finance Division performs internal audits on selected procedures and operations throughout the City organization. The selection of priorities and timing of audits are determined by the Finance Director, along with the City Manager. Single Audit. As a recipient of federal and state financial assistance, the City is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws and regulations related to those programs. Internal controls are subject to periodic evaluation by management. The tests relating to the receipt of such funds are known as Single Audit testing. These tests are made to determine the adequacy of internal controls, including that portion related to federal financial assistance programs, as well as to determine that the City has complied with applicable laws and regulations. The compliance section is included in the final section of this document. Budgetary Controls. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of all funds are included in the annual appropriated budget. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established by division and department within an individual fund. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbered amounts are reserved at year-end and carried forward into the following year. Grace Heritage and Founders Park grand reopening xii As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. OTHER INFORMATION Independent Audit. The City Charter requires an annual audit by independent certified public accountants. The accounting firm of Weaver and Tidwell, LLP was selected by the City Council. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended September 30, 2017, are free of material misstatement. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion and that the City’s financial statements for the fiscal year ended September 30, 2017, are fairly presented in conformity with GAAP. The independent auditor’s report on the basic financial statements and schedules are included in the financial section of this report. Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2016. The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such Comprehensive Annual Financial Reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year. The City has received a Certificate of Achievement for thirty (30) consecutive years. We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to the GFOA. We are also proud to report that the GFOA has presented the Distinguished Budget Presentation Award to the City of Georgetown for each of the past twenty-eight (28) years. Acknowledgments. The presentation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Division. We would like to express our appreciation to all members of the division who assisted and contributed to its presentation. Special acknowledgment goes to the accounting and budget staff, for their dedication in preparing this report. We would also like to thank the Mayor and City Council. The preparation of this report would not be possible without their leadership and support. Sincerely, David Morgan Laurie Brewer, CGFO City Manager Assistant City Manager Leigh Wallace Elaine Wilson Finance Director Controller CITY MANAGER Administrative Services Public Communications CITY ATTORNEY CITY SECRETARY BOARDS &COMMISSIONS MUNICIPAL COURT JUDGE HOME RULE CITY Citizens of Georgetown CITY COUNCIL Mayor and Councilmembers LIBRARY Library ServicesDirector PLANNING Planning Director Convention &Visitor’s Bureau POLICE SERVICES Police Chief Administrative ServicesBureau Animal Services Operations Bureau Code Enforcement FINANCE AND ADMINISTRATION Finance Director Accounting Finance Administration Municipal Court Fleet Services Purchasing ECONOMIC DEVELOPMENT Economic Development Director UTILITY OPERATIONS Utility Operations Director Control Center EnergyServices Safety &Training Technical Services WaterServices FIRE SERVICES Fire Chief Emergency Services Support Services INFORMATION TECHNOLOGY InformationTechnology Director IT Capital Replacement &Projects IT Operations GEORGETOWN UTILITY SYSTEMS General Manager of Utilities DEVELOPMENT &PLANNING Assistant City Manager COMMUNITY SERVICES &FINANCE Assistant CityManager ENGINEERING Systems Engineering Director ElectricalEngineering Transportation Engineering Water/WastewaterEngineering GUS Administration PUBLIC WORKS Public Works Director Airport Solid Waste&Recycling Services Stormwater Drainage Streets Public Works Administration CUSTOMER CARE Customer Care Director Customer Operations Customer Service Marketing and Conservation Housing &CDBG Grants InspectionServices PARKS &RECREATION Parks &Recreation Director Facilities Maintenance Parks Recreation Tennis Center ORGANIZATIONAL CHART This page visually represents the Divisions and Departments of the City of Georgetown. HUMAN RESOURCES Human Resources Director Arts &Culture EMS Resource ManagementGareyPark Library City Of Georgetown, Texas Elected Officials and Administrative Officers September 30, 2017 xv Elected Officials Mayor Dale Ross City Council Member, District 1, Mayor Pro Tem Anna Eby City Council Member, District 2 Valerie Nicholson City Council Member, District 3 John Hesser City Council Member, District 4, Steve Fought City Council Member, District 5 Ty Gipson City Council Member, District 6 Rachael Jonrowe City Council Member, District 7 Tommy Gonzalez Appointed Officials City Manager David Morgan City Attorney Charlie McNabb City Secretary Shelley Nowling Municipal Court Judge Randy Stump Other City Officials General Manager for Utilities Jim Briggs Assistant City Manager Laurie Brewer Assistant City Manager Wayne Reed Finance Director Leigh Wallace Fire Chief John Sullivan Police Chief Wayne Nero xvi Austin Dallas/Fort Worth San Antonio Lubbock El Paso Amarillo Houston Georgetown Location Georgetown is the northern most “gateway” to the gently rolling hills of Central Texas. While Georgetown offers the amenities and charm of a small community rooted in values of days gone by, it is strategically and centrally located in the middle of the four major metropolitan areas of Texas. Austin is 26 miles south, Dallas is three hours north, Houston is three hours southeast and San Antonio is just one-and-a-half hours south, placing Georgetown in a very advantageous position for cultural and economic development. Traveling to and from Georgetown is easy, as it is at the crossroads of IH-35 going north/south and State Highway 29 going east/west. Access to Georgetown via the Austin-Bergstrom International Airport was made much easier with the opening of State Highway 130, the toll road from Georgetown to San Antonio that parallels IH-35. 1 Financial Section 2 This page intentionally left blank. AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 1601 SOUTH MOPAC EXPRESSWAY, SUITE D250, AUSTIN, TX 78746 P: 512.609.1900 F: 512.609.1911 3 Independent Auditor’s Report The Honorable Mayor Members of the City Council City of Georgetown, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Georgetown, Texas (the City), as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. City of Georgetown, Texas 4 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City, as of September 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof, and the respective budgetary comparison for the general fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, Texas Municipal Retirement System pension schedules, Other Post-employment Benefits schedules, and Modified Approach for Street Infrastructure Capital Assets on pages 7 - 19 and 82 - 85 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generallys accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual major and nonmajor fund financial statements and schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for the purposes of additional analysis as required by the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and is also not a required part of the basic financial statements. The combining and individual major and nonmajor fund financial statements and schedules and the schedule of the expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual major and nonmajor fund financial statements and schedules and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. City of Georgetown, Texas 5 The introductory and statistical sections listed in the table of contents have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 28, 2018 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. WEAVER AND TIDWELL, L.L.P. Austin,Texas February 28, 2018 6 This page intentionally left blank. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations 7 The following discussion and analysis of the City of Georgetown financial performance provides an overview of the City’s financial activities for the fiscal year ended September 30, 2017. Please read it in conjunction with the transmittal letter at the front of this report and the City’s financial statements, which follow this section. Financial Highlights General Fund At the end of the current fiscal year, the fund balance of the General Fund was $13,325,625 or 6.2% higher than FY 2016 fund balance. The fund had $9.3 million of committed fund balance, $0.9 million of assigned fund balance and $2.9 million of unassigned fund balance. Revenues were $1,715,464 more than the original budget estimates. General Fund revenues increased $3.3 million, an increase of 7.1% over FY 2016. This increase is due to greater revenues from growth in sales tax, other charges for services, and increased ad valorem taxes. General Fund expenditures increased by $2.8 million, an increase of 5.1% over FY 2016. This increase was due to citywide salary increases for merit and market adjustments that went into effect February 2017, increased IT costs, and public safety personnel. Governmental Activities On a government-wide basis for governmental activities, the City had expenses net of program revenue of $44.7 million. General revenues and transfers totaled $65.8 million, resulting in an increase in net position of $21.2 million. As of September 30, 2017, the City's governmental activities reported combined ending net position balances of $308 million. The largest element of this balance is the value of the City’s investment in capital assets, which totaled $266.5 million. Capital assets include the value of streets, parks and facilities, net of related debt. During fiscal year ended September 30, 2017, the City issued approximately $23 million in General Obligation and Certificates of Obligation bonds for entity-wide purposes. The debt issue included $2 million for equipment, $5.7 million for facilities, $5.7 million for roads, $6.5 million for parks, and $2.5 for sidewalk projects. The City's general obligation debt is rated AA+ by Standard & Poor's and AA2 by Moody's. Business-Type Activities The net position of the City's business-type activities had a current year increase of $29.8 million. The current year increase is due to the continued growth of the customer base of the utility systems. The City also received $12.3 million of infrastructure assets contributed by developers for commercial projects and residential subdivisions. The City’s total debt issue included $27.9 million of utility system revenue bonds. Projects included electric transformers and system improvements, and water and wastewater system improvements, as well as a refunding of outstanding debt issued at higher rates, which resulted in a net savings of $.355 million. The City’s Standard & Poor's rating is AA and the Moody's rating is AA2 on the utility system revenue debt. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations – Continued 8 Management’s Discussion and Analysis Financial Statements Required Supplementary Information Governmental Activities (Full Accrual) Business - Type Activities (Full Accrual) Notes to the Financial Statements Fund Governmental (Modified Accrual) Proprietary (Full Accrual) Fiduciary (Full Accrual) Government-Wide Entity-Wide The City's total net position on a government-wide basis was $745.5 million at September 30, 2017, an increase of 6.8% over September 30, 2016. Most of this balance is invested in capital assets or restricted for specific purposes. The City received $38.2 million of operating and capital grants and other contributions in FY 2017. Using the Financial Section of this Comprehensive Annual Financial Report This Comprehensive Annual Financial Report consists of three sections: introductory, financial and statistical. As illustrated in the following chart, the financial section of this report has three components: management’s discussion and analysis (this section), the basic financial statements, and required supplementary information. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations – Continued 9 Components of the Financial Section Basic Financial Statements Government-Wide Financial Statements The government-wide financial statements report information about the City as a whole, using accounting methods similar to those used by private-sector companies. The statement of net position includes all of the government’s assets and liabilities, reported using the full accrual basis of accounting. The statement of activities accounts for all of the current year’s revenues and expenses, regardless of when cash is received or paid. The two government-wide statements report the City’s net position and how it has changed. Net position, which is the difference between the City’s assets and deferred outflows and liabilities and deferred inflows, are one way to measure the financial health of the City. Over time, increases or decreases in the City’s net position is an indicator of whether its financial health is improving or deteriorating. To assess the overall health of the City, one needs to consider other non-financial factors such as changes in the City’s property tax base and condition of the City’s infrastructure. The government-wide financial statements of the City are divided into two categories: Governmental Activities – Most of the City’s basic services are included here, such as police, fire and other public safety services, parks and recreation, public library, street maintenance, environmental services, and general administration. Property and sales taxes, return on investment from the City’s utility services, and charges for services finance most of these activities. Business-Type Activities – The City’s Water Services Fund, which includes water, wastewater and irrigation services, as well as its Electric utility, are reported here. Stormwater Drainage and the City’s Airport are also reported in these activities. Fees charged to customers fund the costs of providing these services. Fund Financial Statements The fund financial statements provide more detailed information about the City’s most significant funds and will be more familiar to traditional users of government financial statements. The focus is on major funds rather than fund types. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations – Continued 10 The City has three types of funds: Governmental Funds – General Fund, Special Revenue Funds, Capital Projects Funds and the Debt Service Fund are governmental funds, which focus on: (1) How cash and other financial assets can readily be converted to cash flow (in and out), and (2) Year-end balances readily available for spending. Consequently, the governmental funds statements provide a short-term view that helps determine whether there are greater or fewer financial resources that can be spent in the near future to finance the City’s programs. Because this information does not encompass the additional long-term focus of the government-wide statements, additional information is provided with the governmental fund financial statements that explain the reconciliation between the fund statements and the government-wide statements. Proprietary Funds – Services for which the City collects fees and rates intended to fully recover the cost of providing the service are reported in proprietary funds. Two types of proprietary funds are allowed in governmental accounting: enterprise funds and internal service funds. These funds, similar to government-wide statements, provide both long-term and short-term financial information. The City’s enterprise funds are substantially the same as its business-type activities, but the fund financial statements provide more detail and additional information, such as cash flows. The City uses enterprise funds to account for its electric, water services, airport, and stormwater drainage activities. The City uses internal service funds to report activities that provide supplies and services for the City’s other programs, activities and funds. The City’s internal service funds are used in providing facility maintenance, fleet services, joint services (providing administrative functions to the other funds), as well as information technology services and self-funded health insurance. Fiduciary Funds – The City is trustee, or fiduciary, for certain amounts held on behalf of others, and for certain pass-through arrangements. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. The City’s fiduciary activities are reported in a separate statement of fiduciary net assets. Assets for assessment collections for the City's public improvement districts and pass-through lease agreements for Texas Capital Fund projects are held in fiduciary funds. These fiduciary activities are excluded from the City’s government-wide financial statements because the City cannot use these assets to finance its operations. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations – Continued 11 Financial Analysis of the City as a Whole Statement of Net Position The following table reflects the condensed Statement of Net Position: 2017 2016 2017 2016 2017 2016 Current and other assets 104,151$ 106,391$ 113,564$ 85,838$ 217,715$ 192,229$ Capital assets 415,793 376,576 447,241 426,838 863,034 803,414 Total assets 519,944 482,967 560,805 512,676 1,080,749 995,643 Deferred outflows 10,175 11,844 3,698 3,741 13,873 15,585 Total assets and deferred outflows 530,119 494,811 564,503 516,417 1,094,622 1,011,228 Long-term liabilities 208,994 181,504 117,371 89,068 326,365 270,572 Other liabilities 13,113 26,460 9,601 19,573 22,714 46,033 Total liabilities 222,107 207,964 126,972 108,641 349,079 316,605 Net investment in capital assets 266,519 251,494 374,238 380,035 640,757 631,529 Restricted 6,424 4,958 - - 6,424 4,958 Unrestricted 35,069 30,394 63,292 27,741 98,361 58,135 Total net position 308,012$ 286,846$ 437,530$ 407,776$ 745,542$ 694,622$ Governmental Activities Business-Type Activities Total Primary Government 50% 8% 36% 1%5% Primary Government Net Position - 9/30/2017 Bus TypeNet Inv Assets Bus TypeUnrestricted GovtNet Inv Assets GovtRestricted GovtUnrestricted City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) – Continued 12 2017 2016 2017 2016 2017 2016 Revenues Program revenues Charges for services 21,859$ 17,917$ 119,568$ 118,585$ 141,427$ 136,502$ Operating grants and contributions 471 398 - - 471 398 Capital grants and contributions 5,612 12,784 32,180 25,105 37,792 37,889 General revenues Property taxes 24,735 22,815 - - 24,735 22,815 Sales taxes 23,009 21,556 - - 23,009 21,556 Other taxes 3,027 2,460 - - 3,027 2,460 Franchise taxes 4,973 4,926 - - 4,973 4,926 Interest 731 399 544 271 1,275 670 Other 165 - - - 165 - Total revenues 84,582 83,255 152,292 143,961 236,874 227,216 Expenses Culture/recreation 11,904 12,128 - - 11,904 12,128 Development 2,562 2,664 - - 2,562 2,664 Fire 16,114 15,090 - - 16,114 15,090 General government 5,959 6,490 - - 5,959 6,490 Interest on long-term debt 5,826 4,455 - - 5,826 4,455 Police 16,537 15,938 - - 16,537 15,938 Streets 7,376 7,441 - - 7,376 7,441 Environmental services 6,326 5,965 - - 6,326 5,965 Electric - - 66,384 59,649 66,384 59,649 Water services - - 39,960 36,680 39,960 36,680 Airport - - 3,123 2,655 3,123 2,655 Stormwater - - 3,883 3,844 3,883 3,844 Total expenses 72,604 70,171 113,350 102,828 185,954 172,999 Change in net position before transfers 11,978 13,084 38,942 41,133 50,920 54,217 Transfers 9,188 10,371 (9,188) (10,371) - - Change in net position 21,166 23,455 29,754 30,762 50,920 54,217 Net position - beginning 286,846 263,392 407,776 377,014 694,622 640,406 Net position - ending 308,012$ 286,847$ 437,530$ 407,776$ 745,542$ 694,623$ Governmental Activities Business-Type Activities Total Primary Government The City's combined net position increased by $50.9 million to $745.5 million from $694.6 million in FY 2016. Net position of Governmental Activities was $308 million. Most of these assets are invested in capital assets or restricted for particular purposes, such as debt service or capital projects. The City's unrestricted net position for governmental activities, which can be used to finance day-to-day operations, totaled $35 million. Of that total, $2.86 million was unassigned fund balance available for future appropriations. Included in unrestricted net position are fund balances that are earmarked for particular purposes, such as parks improvements, street maintenance, development, and tourism. The balance of these funds at September 30, 2017 was $5 million. Net position invested in capital assets net of related debt for governmental activities increased $12.2 million, primarily due to developer contributed capital and additions to capital assets. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) – Continued 13 Current year net position for business-type activities increased by $29.8 million, due to the growth in the customer base, developer contributed capital, and capital assets. During 2017, the City invested $25 million towards improving and expansion of utility infrastructure, compared to $20 million in 2016. Revenues Program revenues are derived from the program itself and reduce the cost of the function to the City. Total program revenues for both governmental and business-type activities are described below. Governmental activities program revenue for the fiscal year ended September 30, 2017 was $27.9 million. The Charges for Services category represents receipts primarily from environmental services, development and building inspection fees, parks fees, fire billing for services and court fines. Charges for services totaled $21.9 million in FY 2017, or 18% over prior year revenues. Other governmental program revenues included operating and capital grants and contributions for parks, fire and police programs, and streets. Capital grants and contributions totaled $6 million compared to $13.1 million last fiscal year. Business-type activities program revenue totaled $151.7 million, a 5.6% increase over prior year. Capital grants and contributions were $7 million higher than the prior year due primarily to continued growth in developer contributions. Charges for Services, which represent receipts from utility customers for electric, water, and wastewater, increased $1 million. Electric charges for service increased 4.7% due to customer growth and increases in rates. Other program revenues include airport fuel sales, hangar rentals and stormwater drainage fees. General revenues are revenues from taxes levied on behalf of the general government and other revenues used for general government activities not specific to a program or service. These revenues and notable changes are described below. 60% 16% 10% 10%4% Primary Government Revenues Charges for Services Grants and Contributions Property taxes Sales taxes Other City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) – Continued 14 Property taxes totaled $24.7 million. Included in these taxes are real and personal property levies which are assessed October 1, and payable before the following January 31. Certified assessed valuations in FY 2017 increased 17.8%. The total growth in assessed valuations is $1,264.1 million compared to FY 2016 certified assessed valuations. The ad valorem tax rate for fiscal year 2017 was $0.424 per $100 of assessed valuation. This is a decrease over the prior year’s rate of $0.434. The adopted tax rate is a 2.99% above the 2017 effective rate. Sales taxes, the City’s second largest source of general revenue, totaled $23 million for fiscal year 2017, which was an increase of 6.3% compared to the prior year. This increase is primarily driven by the continued economic growth in retail, food, and information sectors. Sales tax revenues represented 41% of the general government revenue total in 2017, excluding the return-on-investment transfers from the utility funds. Hotel/motel taxes totaled $1,216,063 compared to $844,316 in FY 2016 and are included in other taxes. No new properties opened in FY 2017, however, revenues reflect a full year of collections for the Sheraton Hotel and Conference Center opened in July 2016. Expenses Expenses for governmental activities totaled $72.6 million, versus $70 million in FY 2016. Total expenses increased by $2.6 million compared to the prior year. Major expenses include the Environmental Services (sanitation) contract, the initiation of the GoGeo bus system, as well as for parks and streets maintenance. Salary increases implemented during the fiscal year included step increases for public safety as well as merit and market increases for non-public safety employees effective February 2017. Other explanations for the changes are noted below. Public Safety increased 4.97% due to additional positions added in the Fire, EMS and Police departments. 36% 21%4% 6% 18% 8% 4%3% Primary Government Expenses Electric Water Other Enterprise Culture/recreation Public Safety Other Govermental City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) – Continued 15 Environmental services increased 5.7% due to increased costs in solid waste collection and recycling services. Overall IT service allocations increased across departments due to new software applications and new user accounts being implemented. Expenses for business-type activities totaled $113.4 million, a 9.3% increase over the prior year, which provided electric, water, and wastewater services for customers, as well as airport and stormwater drainage programs. Salary increases implemented during the fiscal year included merit and market increases for employees effective February 2017. Notable explanations for the changes are explained below. Electric increased 10.1%. The increase in expenses for electric can be associated with growth and increased utility contract costs. Water services increased 8.2%. The increase can be attributed to growth and increased utility contract costs. The 15% increase at the Airport is related to the fluctuations in the price of fuel compared to FY 2016. Overall IT service allocations increased across departments due to new software applications and new user accounts being implemented. Financial Analysis of the City’s Funds Governmental Funds: The City’s fund balance is the accumulated difference between assets and liabilities within governmental funds, and it allows the City to meet its contractual obligations, fund disaster or emergency costs, provide cash flow for timing purposes and fund non-recurring expenses appropriated by City Council. For the fiscal year ended September 30, 2017, the City's governmental funds reflect a combined fund balance of $76.5 million. The General Fund had a fund balance of $13.3 million for FY 2017, an increase of approximately $829,000 over FY 2016. According to the Fiscal and Budgetary Policy of the City, the use of excess fund balance is limited to non-recurring one time only expenses. Excess funds are transferred to the Council Special Revenue fund for future designation. General Capital Project Fund had a fund balance of $31.5 million for FY 2017 compared to $41.4 million for FY 2016. This decrease is due to large project expenditures for Garey Park, San Gabriel Improvements, Southwest Bypass, Southeast Inner Loop and Sheraton Garage which included some expenditures encumbered in prior years. Non-major governmental funds include an increase in fund balance of approximately $3.4 million due to the funding and timing of street improvement projects in the Sales Tax Maintenance Fund, increased revenues in EMS Fund, and increased Hotel Tax revenues in the Tourism Fund due to a full year of the Sheraton Hotel and Convention Center being open. General Debt Service Fund reflects an increase of $71,736 in fund balance in FY 2017. Activity increased due to higher ad valorem taxes collected for interest and sinking. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) – Continued 16 Georgetown Transportation Enhancement Corporation (GTEC), the City’s blended component unit, had a 0.9% increase in fund balance due to the timing of capital improvement projects. GTEC contributed $11.5 million in transportation improvements to facilitate economic development in 2017, which included some expenditures encumbered in prior years. Business-Type Activities: The City’s proprietary fund statements provide the same type of information found in government-wide financial statements, but in more detail. Total unrestricted net position as of September 30, 2017 totaled $63.3 million, which included $3.3 million for Electric, $57.5 million for Water and $2.5 million for all other Non-Major funds. The change in net position for FY 2017 was $29.7 million resulting primarily from continued growth in the City’s utility systems and development funded capital improvements. General Fund Budgetary Highlights The original and final budget of the General Fund changed due to a budget amendment for increased sales tax collections and transfers in from the Council Discretionary fund. The budget amendment also included funding for a new position in Planning and transfers out to Joint Services to fund new positions in Finance. The variance between the actual ending fund balance (budgetary basis) at September 30, 2017 of $12.1 million and the final budgeted fund balance of $10.4 million is attributed to higher than expected franchise revenues and lower expenditures. Expenditures were less than budgeted primarily due to timing of projects and vacant positions. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) – Continued 17 Capital Assets The City's governmental activities (including the internal service funds) had invested $415.8 million in a variety of capital assets and infrastructure. The City has $447.2 million invested in its business-type activities capital assets. The detail is reflected in the following schedule: Balance 9/30/2016 Additions Deletions and Transfers Balance 9/30/2017 Governmental activities Non-depreciable assets Land 28,612$ -$ 2,470$ 31,082 Construction in progress 49,929 39,162 (14,589) 74,502 Streets 181,655 2,635 - 184,290 Other capital assets Equipment 47,056 2,630 62 49,748 Buildings 78,285 157 7,060 85,502 Improvements 51,682 500 4,045 56,227 Less accumulated depreciation (60,643) (5,867) 952 (65,558) Governmental activities total 376,576 39,217 - 415,793 Business-Type activities Non-depreciable assets Land 3,666 11 3,677 Construction in progress 13,972 20,076 (18,908) 15,140 Other capital assets Equipment 5,653 844 (1,117) 5,380 Buildings 7,608 7 (19) 7,596 Improvements 533,988 12,559 20,044 566,591 Less accumulated depreciation (138,049) (13,094) - (151,143) Business-Type activities total 426,838 20,403 - 447,241 City-Wide totals 803,414$ 59,620$ -$ 863,034$ The City prepared a complete inventory of street infrastructure assets in 2003 and 2004 and assigned a value to the inventory based upon the age of the street and construction indexes. This established a base line for inventory reporting under the modified approach for GASB 34 reporting. The Council adopted a financial policy that establishes an average condition level of 85 to maintain the streets in “good” condition. The Pavement Condition Index (PCI) is a measurement scale for pavement condition, ranging from zero (poor) to 100 for pavement in perfect condition. The PCI for fiscal years 2005-2007 was 91, 2008-2010 was 93, 87.7 in 2011-2013, and 2014-2017 was 87.3. This decrease can be attributed to recently annexed areas with streets needing improvements. This assessment is conducted every three years and will be started in October 2017 with a final report in Spring 2018. The City budgets approximately $1.2 million annually of General Fund revenues for on-going street maintenance projects, along with the staff and maintenance costs of the street department. In addition, the City also budgets $3.1 million of funds received in dedicated quarter-cent sales tax for street maintenance. The maintenance funds are allocated among various projects identified by the analysis to ensure funds are spent where needed to maintain the PCI adopted by Council. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) – Continued 18 Utility infrastructure maintenance is budgeted within the utility funds. For fiscal year 2017, funding for electric and water services infrastructure maintenance was approximately $2.0 million. Major capital assets added in FY 2017 are noted below: General Capital Projects: o Construction in Process Projects: $ 39,151,910 • Mays Street • Garey Park • Rivery Extension • Southwest ByPass • EOC Siren System o Rivery Sheraton Garage $ 8,112,566 o VFW Park $ 1,901,229 o Southwest Inner Loop $ 2,469,875 Utility Infrastructure and Capital Projects: o Electric distribution system expansion (including developers) $ 5,640,200 o Water and Wastewater $ 12,985,700 For more detailed notes about the City’s capital assets, please see Note 5 to the financial statements. Outstanding Debt 2017 2016 2017 2016 2017 2016 General obligation bonds 170,195$ 157,168$ 13,865$ 15,286$ 184,060$ 172,454$ Premiums 6,020 4,597 5,152 2,944 11,172 7,541 Sales tax revenue bonds 6,685 7,225 - - 6,685 7,225 Revenue bonds - - 92,730 72,545 92,730 72,545 Compensated absences payable 5,392 5,472 1,001 932 6,393 6,404 Net pension liability 19,554 18,603 4,623 4,398 24,177 23,001 Other post-employment benefits 1,148 973 - - 1,148 973 Total long-term liabilities 208,994$ 194,038$ 117,371$ 96,105$ 326,365$ 290,143$ Governmental Activities Business-type Activities Total Primary Government As of September 30, 2017, the City had a total of $184 million in general obligation debt outstanding. This represents a 6.7% increase over prior year. This increase reflects $8.5 million of 2017 General Obligation bonds and $14.4 million of 2017 Certificates of Obligation issued in May 2017. The state limits the legal amount of tax levy available for general obligation debt service to $1.50 per $100 valuation. The City's 2017 debt levy equaled $0.22734 per $100 assessed valuation, or 15.16% of the maximum allowed. City of Georgetown, Texas Management’s Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) – Continued 19 Other long-term debts included are compensated absence payable, net pension obligation, and other post-employment benefits. These experienced an increase over FY 2016 of $1.3 million due to current year changes in accordance with GASB statement No. 68. A detailed analysis of the City’s other long- term debt liabilities are located in Note 6.A., Note 7 and Note 8. In May 2017, the City issued $22.9 million in Combination Tax and Revenue Certificates of Obligation and General Obligation bonds for public safety equipment, Downtown West facilities, Garey Park, various sidewalk projects, and Airport Road. The City also issued $27 million in Utility System Revenue Bonds for electric system expansion, the CIS billing system, water and wastewater plant improvements and line expansions. A detailed analysis of the City’s long-term debt is located in Note 6 to the financial statements. Economic Factors During FY 2017, the City continued to see strong improvements in the local and regional economy. Total sales tax receipts grew to $23 million, or by 6.3% over 2016. The growth in residential and commercial development continued in FY 2017, while unemployment decreased slightly from 4.0% in 2016 to 2.9% in 2017. The residential growth in the City’s utility service area, which includes both the city limits and the City’s extra territorial jurisdiction (ETJ), continued it a steady 5% growth rate. The adopted FY 2018 budget assumes continued modest growth in new property of approximately $197 million and an adopted tax rate of $0.420 per $100 valuation. Sales tax revenues have seen a slowing of growth year over year, which trends with the state of Texas as a whole. The 2018 budget projects sales tax growth of 4%. This modest growth trend is also anticipated in the City’s utility funds. Discretely Presented Component Unit The Georgetown Economic Development Corporation (GEDCO) has been included in the reporting entity as a discretely presented component unit since it provides benefits to other entities aside from the City. Separate audited financial statements are not issued for GEDCO. Contacting the City’s Financial Management This report is designed to provide City Council, citizens, customers, bond rating agencies, investors and creditors with a general overview of the City’s finances. If you have questions about this report or need additional financial information, contact: Finance Division City of Georgetown 113 East 8th Street Georgetown, Texas 78626 (512) 930-7679 www.georgetown.org finance@georgetown.org 20 This page intentionally left blank. 21 Basic Financial Statements City of Georgetown, Texas Statement of Net Position September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 22 Component Unit Georgetown Economic Governmental Business-type Development Activities Activities Total Corporation Cash and cash equivalents 67,116,125$ 47,915,698$ 115,031,823$ 5,768,347$ Cash and cash equivalents - restricted - 19,233,438 19,233,438 - Investments 21,978,456 - 21,978,456 45 Investments - restricted - 20,320,190 20,320,190 - Prepaid items 439,695 4,951,363 5,391,058 - Accounts receivable Services (net of allowance for uncollectibles)- 15,817,894 15,817,894 - Other 11,027,087 673,570 11,700,657 256,975 Internal balances (157,627) 157,631 4 - Inventories 672,653 3,732,198 4,404,851 - Long-term note receivable 3,074,818 761,957 3,836,775 - Capital assets Land 31,081,513 3,677,188 34,758,701 171,382 Streets 184,290,635 - 184,290,635 - Building and improvements 141,730,544 7,595,870 149,326,414 296,874 Machinery, furniture and equipment 49,748,467 5,380,444 55,128,911 - Distribution system - 566,590,667 566,590,667 - Construction in progress 74,500,957 15,140,157 89,641,114 - Accumulated depreciation (65,558,911) (151,143,668) (216,702,579) (30,182) Total assets 519,944,412 560,804,597 1,080,749,009 6,463,441 DEFERRED OUTFLOWS OF RESOURCES Deferred outflow related to pension 8,006,009 2,398,685 10,404,694 - Deferred charge on refunding 2,168,690 1,298,960 3,467,650 - Total deferred outflows of resources 10,174,699 3,697,645 13,872,344 - TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 530,119,111$ 564,502,242$ 1,094,621,353$ 6,463,441$ LIABILITIES Current liabilities Accounts payable 9,158,755$ 7,287,547$ 16,446,302$ -$ Accrued employee benefits 1,702,724 432,261 2,134,985 - Unearned revenue 2,846,911 107,242 2,954,153 4,000 Unapplied credits 351,728 - 351,728 - Current portion of noncurrent liabilities 11,576,372 6,955,116 18,531,488 224,219 Accrued interest 755,583 508,590 1,264,173 - Liabilities from restricted assets Construction contracts and retainages payable from restricted assets - 305,323 305,323 - Customer deposits payable from restricted assets - 1,392,306 1,392,306 - Noncurrent liabilities Accrued employee benefits 4,837,523 568,323 5,405,846 - Net pension liability 19,553,749 4,622,797 24,176,546 - Long-term debt 171,323,339 104,792,598 276,115,937 3,547,637 Total liabilities 222,106,684 126,972,103 349,078,787 3,775,856 NET POSITION Net investment in capital assets 266,518,836 374,238,275 640,757,111 438,074 Restricted for Debt service 1,385,695 - 1,385,695 - Specific programs 5,037,998 - 5,037,998 - Unrestricted 35,069,898 63,291,864 98,361,762 2,249,511 Total net position 308,012,427 437,530,139 745,542,566 2,687,585 TOTAL LIABILITIES AND NET POSITION 530,119,111$ 564,502,242$ 1,094,621,353$ 6,463,441$ Primary Government ASSETS LIABILITIES AND NET POSITION City of Georgetown, Texas Statement of Activities For the Fiscal Year Ended September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 23 Component UnitGeorgetownEconomicCharges for Operating Grants Capital Grants Governmental Business-typeDevelopmentExpenses Services & Contributions & Contributions Activities ActivitiesTotal CorporationPrimary governmentGovernmental activitiesCulture / recreation11,904,166$ 2,534,735$ 174,765$ 1,112,841$ (8,081,825)$ -$ (8,081,825)$ Development2,561,792 2,653,201 - 451,659 543,068 - 543,068 Fire16,113,850 4,116,783 24,434 - (11,972,633) - (11,972,633) General government5,959,340 356,455 130,835 215,789 (5,256,261) - (5,256,261) Police16,537,297 743,304 42,730 - (15,751,263) - (15,751,263) Streets7,376,116 4,124,813 97,840 3,831,736 678,273 - 678,273 Environmental services6,325,688 7,329,850 - - 1,004,162 - 1,004,162 Interest on long-term debt5,826,012 - - - (5,826,012) - (5,826,012) Total governmental activities72,604,261 21,859,141 470,604 5,612,025 (44,662,491) - (44,662,491) Business-type activitiesElectric66,383,559 70,109,269 - 1,218,390 - 4,944,100 4,944,100 Water39,960,102 42,729,980 - 22,946,677 - 25,716,555 25,716,555 Airport3,123,008 3,318,983 - 5,975,389 - 6,171,364 6,171,364 Stormwater3,882,824 3,409,626 - 2,039,815 - 1,566,617 1,566,617 Total business-type activities113,349,493 119,567,858 - 32,180,271 - 38,398,636 38,398,636 Total primary government185,953,754$ 141,426,999$ 470,604$ 37,792,296$ (44,662,491) 38,398,636 (6,263,855) Component unitGeorgetown Economic Development Corporation653,644$ -$ -$ -$ (653,644)$ General revenuesProperty tax24,734,830 - 24,734,830 - Sales tax23,008,606 - 23,008,606 1,568,934 Taxes - other3,027,357 - 3,027,357 - Franchise taxes4,973,295 - 4,973,295 - Investment income731,135 544,050 1,275,185 45,016 Other164,835 - 164,835 108,302 Transfers9,188,144 (9,188,144) - - Total general revenues and transfers65,828,202 (8,644,094) 57,184,108 1,722,252 Change in net position21,165,711 29,754,542 50,920,253 1,068,608 Net position, beginning of the year286,846,716 407,775,597 694,622,313 1,618,977 Net position, end of the year308,012,427$ 437,530,139$ 745,542,566$ 2,687,585$ Net (Expense) Revenue andProgram RevenuesChanges in Net PositionPrimary GovernmentFunctions/Programs 24 This page intentionally left blank. 25 Fund Financial Statements City of Georgetown, Texas Balance Sheet – Governmental Funds September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 26 Georgetown Transportation General Nonmajor Total Enhancement Debt Capital Governmental Governmental General Corporation Service Projects Funds Funds ASSETS Cash and cash equivalents 8,061,406$ 13,273,503$ 1,946,935$ 26,374,777$ 7,605,963$ 57,262,584$ Investments 2,545,707 4,191,633 - 8,328,877 3,800,594 18,866,811 Accounts receivable, net Property taxes 238,800 - 202,452 - - 441,252 Sales tax 2,274,975 1,011,100 - - 623,368 3,909,443 Grants - 1,521,845 - - 752,288 2,274,133 Note receivable 197,633 - - - - 197,633 Other 1,656,598 - - 148,557 2,217,639 4,022,794 Due from other funds 1,606,620 476,842 - 433,217 476,674 2,993,353 Prepaid items 41,069 - - - - 41,069 Inventories 7,946 - - - - 7,946 TOTAL ASSETS 16,630,754$ 20,474,923$ 2,149,387$ 35,285,428$ 15,476,526$ 90,017,018$ LIABILITIES Accounts payable and accrued liabilities 2,250,644$ 559,594$ 8,009$ 2,545,220$ 1,965,002$ 7,328,469$ Due to other funds 476,674 433,217 - - 2,005,770 2,915,661 Unearned revenue 339,011 - - 1,283,556 1,224,344 2,846,911 Total liabilities 3,066,329 992,811 8,009 3,828,776 5,195,116 13,091,041 DEFERRED INFLOWS OF RESOURCES Deferred property taxes 238,800 - 202,452 - - 441,252 Total deferred inflows of resources 238,800 - 202,452 - - 441,252 FUND BALANCE Nonspendable 246,648 - - - - 246,648 Restricted - - 1,938,926 17,258,365 5,037,998 24,235,289 Committed 9,297,000 11,556,682 - - 5,405,555 26,259,237 Assigned 919,906 7,925,430 - 14,198,287 333,207 23,376,830 Unassigned 2,862,071 - - - (495,350) 2,366,721 Total fund balance 13,325,625 19,482,112 1,938,926 31,456,652 10,281,410 76,484,725 TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCE 16,630,754$ 20,474,923$ 2,149,387$ 35,285,428$ 15,476,526$ 90,017,018$ City of Georgetown, Texas Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 27 Total fund balance - total governmental funds 76,484,725$ The City uses internal service funds to charge the costs of certain activities, such as capital assets, administrative services and information technology to the City's other funds. The assets and liabilities of the internal service funds are included in governmental functions in the 402,356,992 statement of net position. Capital assets, net of accumulated depreciation, used in governmental activities are not current financial resources and therefore are not reported in the governmental funds balance sheet.25,279,047 Long-term debt is not due and payable using available resources and is not recorded in the governmental funds balance sheet. The impact of recognizing long-term debt, and related items is as follows: Bonds payable (176,879,599) Premiums on bond issuance (6,020,112) Deferred charge on refunding bonds 2,168,690 Accrued interest (755,583) Other long-term liabilities, and related amounts, are not due and payable using available resources and are not recorded in the governmental funds balance sheet. The impact of recognizing these items is as follows: Compensated absences (5,244,537) Other post-employment benefits (1,147,893) Net pension liability (19,553,749) Deferred outflow related to pension 8,006,009 Revenues from property taxes are deferred in the governmental fund balance sheet until they are considered available to fund current expenditures, but such revenues are recognized in the government-wide statements.441,252 Long-term receivables are not recognized in the governmental fund balance sheet until the funds are considered available to fund current expenditures. 2,877,185 Net position of governmental activities 308,012,427$ Amounts reported for governmental activities in the statement of net position are different because: City of Georgetown, Texas Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds For the Fiscal Year Ended September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 28 Georgetown Transportation General Nonmajor Total General Enhancement Debt Capital Governmental Governmental Fund Corporation Service Projects Funds Funds REVENUES Property taxes 12,604,850$ -$ 11,975,432$ -$ -$ 24,580,282$ Penalties and interest 81,401 - - - - 81,401 Property assessment - - - - 1,447,839 1,447,839 Sales tax 13,595,005 6,275,734 - - 3,137,867 23,008,606 Franchise taxes 4,973,295 - - - - 4,973,295 Other taxes 363,455 - - - 1,216,063 1,579,518 Licenses and permits 2,652,279 - - - - 2,652,279 Charges for service 11,838,632 - - - 2,435,034 14,273,666 Fines and forfeitures 453,675 - - - 46,902 500,577 Donations and grants 251,974 2,553,529 - 312,300 1,940,665 5,058,468 Investment income 75,836 164,952 59,063 317,416 54,803 672,070 Other revenue 497,196 7,539 - 109,550 1,434,148 2,048,433 Total revenues 47,387,598 9,001,754 12,034,495 739,266 11,713,321 80,876,434 EXPENDITURES Current Culture / recreation 9,552,133 - - - 1,810,148 11,362,281 Development 2,389,998 - - - 127,987 2,517,985 Fire services 12,500,721 - - - 2,347,749 14,848,470 General government 4,436,866 329,601 - - 25,000 4,791,467 Highways and streets 4,120,784 - - - 2,871,275 6,992,059 Police 14,471,049 - - - 266,022 14,737,071 Environmental services 6,189,991 - - - 138,869 6,328,860 Capital outlay - 11,598,850 - 27,383,102 238,037 39,219,989 Debt service Principal retirement - 540,000 9,832,836 - - 10,372,836 Interest and fiscal charges - 419,185 5,048,765 340,975 - 5,808,925 Total expenditures 53,661,542 12,887,636 14,881,601 27,724,077 7,825,087 116,979,943 Excess (deficiency) of revenues over (under) expenditures (6,273,944) (3,885,882) (2,847,106) (26,984,811) 3,888,234 (36,103,509) OTHER FINANCING SOURCES (USES) Transfers in 9,592,342 521,611 2,918,842 548,463 2,382,640 15,963,898 Transfers out (2,489,735) (2,577,502) - (2,190,632) (2,788,864) (10,046,733) Premiums on issuance of bonds - 369,010 - 1,430,276 - 1,799,286 Issuance of bonds - - - 17,210,000 - 17,210,000 Payment to refunding escrow agent - - - - - - Refunding bonds issued - 5,750,000 - - - 5,750,000 Total other financing sources (uses) 7,102,607 4,063,119 2,918,842 16,998,107 (406,224) 30,676,451 Net change in fund balances 828,663 177,237 71,736 (9,986,704) 3,482,010 (5,427,058) FUND BALANCES, beginning of year 12,496,962 19,304,875 1,867,190 41,443,356 6,799,400 81,911,783 FUND BALANCES, end of year 13,325,625$ 19,482,112$ 1,938,926$ 31,456,652$ 10,281,410$ 76,484,725$ City of Georgetown, Texas Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance to the Statement of Activities – Governmental Funds For the Fiscal Year Ended September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 29 (5,427,058) The City uses internal service funds to charge the costs of certain activities, such as fleet management and information technology to appropriate functions in other funds. The change in net position of internal service funds is recognized in governmental actvities in the statement of activities.4,107,422 Current year capital outlays are expenditures in the fund statements, but are shown as increases in capital assets in the government-wide financial statements. The effect of removing the current year capital outlays is to increase net position. Depreciation is not recognized as an expenditure in governmental funds since it does not require the use of current financial resources. Capital outlay 39,219,989 Depreciation (3,210,695) Capital assets contributed or donated to the City are not recognized in governmental funds since they do not provide current financial resources, but are recognized in the statement of activities as program revenues 3,222,539 Proceeds from issuance of long-term debt are recognized as other financing sources in the governmental funds, but are treated as an increase in liabilities in the governmental activities. Principal payments on long-term debt are recognized as expenditures in the governmental funds, but are treated as reductions of liabilities in the governmental activities. Deferred charges on refunding bonds are recognized in the governmental activities, and amortized with the related long-term debt. Premiums on long-term debt issuances are recognized as other financing sources in the governmental funds, but are presented as a component of long-term debt and amortized in the governmental activities. Bond payments 10,473,924 Issuance of bonds (22,960,000) Amortization of bond premiums 375,830 Premium on issuance of bonds (1,799,285) Amortization of deferred charge on refunding (296,078) Interest is accrued on outstanding debt in the governmental activities statement of net position, but in the governmental fund financial statements the expenditure is reported when due.(97,928) Compensated absences, other post-employment benefit obligations, pension liability, and related deferred inflows and outflows of resources are not recognized in the governmental funds as they will not be settled with current financial resources; however these obligations are recognized in the governmental activities statement of net position. The change in these amounts for the current year is: Net pension liability (950,871) Deferred outflow related to pension (1,372,976) Compensated absences 82,767 Other post-employment benefit obligations (175,016) Changes to revenue deferred in the governmental funds but recognized in the governmental activities and to long-term note receivables not recorded in the governmental funds for the current year are: Deferred revenue 73,147 Note receivable (100,000) Change in net position of governmental activities 21,165,711$ Net change in fund balances - governmental funds Amounts reported for governmental activities in the statement of activities are different because: City of Georgetown, Texas Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual – General Fund For the Fiscal Year Ended September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 30 Actual Variance to Budgetary Final Original Final Basis Budget REVENUES Property taxes 12,475,000$ 12,604,850$ 12,604,850$ -$ Penalties and interest 80,000 81,401 81,401 - Sales tax 12,818,683 13,595,005 13,595,005 - Franchise taxes 5,142,035 4,648,758 4,973,295 324,537 Licenses and permits 2,276,510 2,652,478 2,652,479 1 Charges for services 11,499,824 11,838,431 11,838,431 - Fines and forfeitures 566,830 453,675 453,675 - Other taxes 352,800 363,455 363,455 - Investment income 25,500 75,387 75,837 450 Miscellaneous 434,951 720,855 749,169 28,314 Total revenues 45,672,133 47,034,295 47,387,597 353,302 EXPENDITURES Current Culture / recreation 9,584,613 9,584,613 9,434,240 150,373 Development 2,757,848 2,924,944 2,447,208 477,736 Environmental services 5,879,717 6,202,801 6,192,028 10,773 Fire services 12,465,079 12,435,998 12,484,997 (48,999) General government 4,221,081 4,239,960 4,541,802 (301,842) Highways and streets 4,508,246 4,758,246 3,757,464 1,000,782 Police services 14,751,924 14,744,642 14,499,399 245,243 Total expenditures 54,168,508 54,891,204 53,357,138 1,534,066 Excess (Deficiencies) of revenues over expenditures (8,496,375) (7,856,909) (5,969,541) 1,887,368 OTHER FINANCING SOURCES (USES) Transfers in 8,505,241 9,592,342 9,592,342 - Transfers out (1,444,716) (1,512,955) (2,489,735) (976,780) Total other financing sources (uses) 7,060,525 8,079,387 7,102,607 (976,780) EXCESS (DEFICIENCY) OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES)(1,435,850) 222,478 1,133,066 910,588 FUND BALANCES, beginning of period 10,168,638 10,168,638 10,996,406 827,768 FUND BALANCES, end of period 8,732,788$ 10,391,116$ 12,129,472 1,738,356$ ADJUSTMENTS TO GAAP Net changes in unrealized gains/(losses) on investments (1,629) Reserve for encumbrances 919,906 Reverse voided purchase orders 250,569 Reverse prior year adjustments 27,307 FUND BALANCE - GAAP BASIS, end of period 13,325,625$ Budgeted Amounts City of Georgetown, Texas Statement of Net Position Proprietary Funds September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 31 Governmental Activities ASSETS CURRENT ASSETS Cash and cash equivalents -$ 47,820,553$ 95,145$ 47,915,698$ 9,853,541$ Cash and cash equivalents - restricted 2,794,576 14,912,081 1,526,781 19,233,438 - Investments - - - - 3,111,645 Investments - restricted - 19,808,003 512,187 20,320,190 - Prepaid expenses 1,722,562 3,100,458 128,343 4,951,363 398,626 Accounts receivable Services, net 9,597,423 5,711,380 509,091 15,817,894 379,465 Other 481,335 165,112 27,123 673,570 - Due from other funds 77,690 3,948,601 - 4,026,291 - Inventories 3,682,515 - 49,683 3,732,198 664,707 Total current assets 18,356,101 95,466,188 2,848,353 116,670,642 14,407,984 NONCURRENT ASSETS Long-term note receivables - 761,957 - 761,957 - Capital assets Land and land rights 1,590,704 1,104,984 981,500 3,677,188 214,066 Distribution and water systems 167,809,105 347,708,553 51,073,009 566,590,667 - Buildings and improvements 73,707 3,676,432 3,845,731 7,595,870 2,013,566 Machinery, furniture and equipment 1,452,031 1,466,456 2,461,957 5,380,444 36,857,323 Construction in progress - 7,358,762 7,781,395 15,140,157 63,894 Less accumulated depreciation (45,548,031) (87,720,940) (17,874,697) (151,143,668) (25,712,636) Total capital assets (net of accumulated depreciation)125,377,516 273,594,247 48,268,895 447,240,658 13,436,213 Total noncurrent assets 125,377,516 274,356,204 48,268,895 448,002,615 13,436,213 TOTAL ASSETS 143,733,617 369,822,392 51,117,248 564,673,257 27,844,197 DEFERRED OUTFLOWS OF RESOURCES Deferred outflow related to pension 1,312,696 910,944 175,045 2,398,685 - Deferred charge on refunding 729,330 500,447 69,183 1,298,960 - TOTAL DEFERRED OUTFLOWS OF RESOURCES 2,042,026 1,411,391 244,228 3,697,645 - TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 145,775,643$ 371,233,783$ 51,361,476$ 568,370,902$ 27,844,197$ Internal Service Funds Water Services Fund Electric Fund Total Nonmajor Enterprise Funds City of Georgetown, Texas Statement of Net Position – Continued Proprietary Funds September 30, 2017 32 Governmental Activities LIABILITIES AND NET POSITION CURRENT LIABILITIES Accounts payable 5,095,513$ 2,090,974$ 101,060$ 7,287,547$ 1,830,286$ Accrued employee benefits 217,054 181,365 33,842 432,261 64,235 Due to other funds 3,868,660 - - 3,868,660 235,319 Unearned revenue 20,321 76,434 10,487 107,242 351,728 Current portion of long-term debt 2,885,083 3,561,560 508,473 6,955,116 - Accrued interest 163,163 322,272 23,155 508,590 - Construction contracts and retainages payable 4,863 300,460 - 305,323 - Customer deposits 1,392,306 - - 1,392,306 - Total current liabilities 13,646,963 6,533,065 677,017 20,857,045 2,481,568 NONCURRENT LIABILITIES Accrued employee benefits 284,978 238,643 44,702 568,323 83,582 Net pension liability 2,529,857 1,755,589 337,351 4,622,797 - Long-term debt 32,526,258 67,188,873 5,077,467 104,792,598 - Total noncurrent liabilities 35,341,093 69,183,105 5,459,520 109,983,718 83,582 TOTAL LIABILITIES 48,988,056 75,716,170 6,136,537 130,840,763 2,565,150 NET POSITION Net investment in capital assets 93,490,055 237,996,082 42,752,138 374,238,275 13,436,213 Unrestricted 3,297,532 57,521,531 2,472,801 63,291,864 11,842,834 Total net position 96,787,587 295,517,613 45,224,939 437,530,139 25,279,047 TOTAL LIABILITIES AND NET POSITION 145,775,643$ 371,233,783$ 51,361,476$ 568,370,902$ 27,844,197$ Electric Fund Water Services Fund Nonmajor Enterprise Funds Total Internal Service Funds City of Georgetown, Texas Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 33 Governmental Activities OPERATING REVENUES Service chargesElectric 65,001,374$ -$ -$ 65,001,374$ -$ Water - 27,158,332 - 27,158,332 - Wastewater - 10,617,839 - 10,617,839 - Other 1,023,326 4,637,946 6,728,609 12,389,881 34,191,385 Total operating revenues 66,024,700 42,414,117 6,728,609 115,167,426 34,191,385 OPERATING EXPENSES Electric 16,712,384 - - 16,712,384 - Water - 21,485,743 - 21,485,743 - Depreciation 2,852,290 8,793,410 1,462,193 13,107,893 2,656,470 Utility contracts 45,860,499 5,758,868 - 51,619,367 - Plant management - 1,948,524 - 1,948,524 - Other - - 5,340,382 5,340,382 31,108,179 Total operating expenses 65,425,173 37,986,545 6,802,575 110,214,293 33,764,649 NET OPERATING INCOME (LOSS)599,527 4,427,572 (73,966) 4,953,133 426,736 NONOPERATING REVENUES (EXPENSES) Investment income 54,713 474,833 14,504 544,050 59,065 Donations and grants 6,235 5,919 5,929,866 5,942,020 - Interest and fiscal charges (958,386) (1,973,557) (203,257) (3,135,200) - Gain on disposed assets - - - - 164,839 Other 4,084,569 14,182,257 49,107 18,315,933 108,896 Total nonoperating revenues (expenses) 3,187,131 12,689,452 5,790,220 21,666,803 332,800 INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 3,786,658 17,117,024 5,716,254 26,619,936 759,536 CONTRIBUTIONS AND TRANSFERS Capital contributions 1,212,155 9,074,364 2,036,231 12,322,750 76,907 Transfers in - - 5,249 5,249 3,295,979 Transfers out (5,262,925) (3,316,531) (613,937) (9,193,393) (25,000) Total contributions and transfers (4,050,770) 5,757,833 1,427,543 3,134,606 3,347,886 Change in net position (264,112) 22,874,857 7,143,797 29,754,542 4,107,422 NET POSITION, beginning of period 97,051,699 272,642,756 38,081,142 407,775,597 21,171,625 TOTAL NET POSITION, end of period 96,787,587$ 295,517,613$ 45,224,939$ 437,530,139$ 25,279,047$ Electric Fund Total Internal Service Funds Nonmajor Enterprise Funds Water Services Fund City of Georgetown, Texas Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 34 Governmental Water Nonmajor Activities Electric Services Enterprise Internal Fund Fund Funds Total Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 71,866,594$ 56,103,385$ 6,722,828$ 134,692,807$ 34,026,546$ Payments to suppliers (59,999,774) (23,098,409) (3,808,789) (86,906,972) (19,293,209) Payments to employees for services (6,240,441) (3,945,578) (901,643) (11,087,662) (11,792,073) Net cash provided by operating activities 5,626,379 29,059,398 2,012,396 36,698,173 2,941,264 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in - - 5,249 5,249 3,295,979 Transfers out (5,262,925) (3,316,531) (613,937) (9,193,393) (25,000) Net cash provided by (used in) noncapital financing activities (5,262,925) (3,316,531) (608,688) (9,188,144) 3,270,979 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (5,696,843) (8,840,550) (917,655) (15,455,048) (2,546,857) Donations and grants 6,235 5,919 99,107 111,261 - Security deposit - - - - - Proceeds from issuance of long-term debt 7,154,960 20,410,350 - 27,565,310 - Principal paid on revenue and certificates of obligation bonds (2,512,166) (3,546,953) (524,609) (6,583,728) - Interest paid on revenue and certificates of obligation bonds (901,470) (1,857,543) (202,721) (2,961,734) - Net cash used in capital and related financing activities (1,949,284) 6,171,223 (1,545,878) 2,676,061 (2,546,857) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 54,713 474,833 14,504 544,050 59,065 Change in temporary investments - 3,527,185 (88,927) 3,438,258 1,711,749 Net cash provided by investing activities 54,713 4,002,018 (74,423) 3,982,308 1,770,814 Net change in cash and cash equivalents (1,531,117) 35,916,108 (216,593) 34,168,398 5,436,200 CASH AND CASH EQUIVALENTS, beginning of year 4,325,693 26,816,526 1,838,519 32,980,738 4,417,341 CASH AND CASH EQUIVALENTS, end of year 2,794,576$ 62,732,634$ 1,621,926$ 67,149,136$ 9,853,541$ CLASSIFIED AS Current assets -$ -$ -$ -$ 9,853,541$ Restricted assets 2,794,576 62,732,634 1,621,926 67,149,136 - Total 2,794,576$ 62,732,634$ 1,621,926$ 67,149,136$ 9,853,541$ NON-CASH DISCLOSURE Capital contributions 1,212,155$ 9,074,364$ 2,036,231$ 12,322,750$ 76,907$ OPERATING INCOME (LOSS)599,527$ 4,427,572$ (73,966)$ 4,953,133$ 426,736$ Adjustments to reconcile operating income (loss) to cash provided by operating activities Depreciation 2,852,290 8,793,410 1,462,193 13,107,893 2,656,470 Gain on disposal of asset - - - - 164,839 Other income 4,084,569 14,182,257 - 18,266,826 108,896 Decrease (increase) in other assets - - - - - Decrease (increase) in prepaid expenses 27,326 (187,617) 652,828 492,537 (48,000) Decrease (increase) in inventories 446,721 - (7,913) 438,808 47,209 Decrease (increase) in accounts receivable 1,549,347 (502,877) (5,781) 1,040,689 (343,247) Decrease (increase) in customer deposits 207,978 - - 207,978 - Increase (decrease) in due to/from other funds (1,670,455) 2,702,431 - 1,031,976 - Increase (decrease) in accounts payable (2,618,719) (495,697) (27,193) (3,141,609) 20,639 Increase (decrease) in unearned revenue - 9,888 - 9,888 (95,327) Increase (decrease) in net pension liability 123,025 85,373 12,886 221,284 - Increase (decrease) in accrued employee benefits 24,770 44,658 (658) 68,770 3,049 Net cash provided by operating activities 5,626,379$ 29,059,398$ 2,012,396$ 36,698,173$ 2,941,264$ City of Georgetown, Texas Statement of Fiduciary Net Position Agency Funds September 30, 2017 The Notes to Financial Statements are an integral part of this statement. 35 ASSETS Cash and cash equivalents 29,862$ Accounts receivable 18,454 TOTAL ASSETS 48,316$ LIABILITIES Accounts payable 29,862$ Due to other governments 18,454 TOTAL LIABILITIES 48,316$ 36 This page intentionally left blank. 37 Notes Section 38 This page intentionally left blank. City of Georgetown, Texas Notes to Financial Statements 39 Note 1. Summary of Significant Accounting Policies The accounting and reporting policies of the City of Georgetown, Texas, (the City), included in the accompanying basic financial statements conform to the generally accepted accounting principles (GAAP) applicable to state and local governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following notes to the financial statements are an integral part of the City's Comprehensive Annual Financial Report. A. Reporting Entity The City of Georgetown was incorporated under the laws of the State of Texas in 1848 and operates under a Council-Manager form of government. The City’s financial statements include the accounts of all City operations. Generally accepted accounting principles require all funds that are controlled by or are dependent on the City Council to be included in the City’s financial statements. The reporting entity is the primary government, or the City, and those component units for which the primary government is financially accountable. Financial accountability is defined as the appointment of a voting majority of the potential component unit‘s board and either the ability to impose its will by the primary government or the possibility that the component unit will provide a financial benefit or impose a financial burden on the primary government. Blended component units, although legally separate entities are, in substance, part of the government’s operations and so data from these units are combined with the data of the primary government. Based upon these considerations, the City’s financial statements include the Georgetown Transportation Enhancement Corporation (GTEC) as a blended component unit. Discretely presented component units, on the other hand, are reported in a separate column in the government-wide financial statements to emphasize they are legally separate from the primary government, and whose exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Based upon these considerations, the City’s financial statements include the Georgetown Economic Development Corporation (GEDCO) as a discretely presented component unit. Blended Component Unit GTEC, the City’s 4B economic development corporation, is a legally separate entity from the City that was created in May 2001 by voters approving an additional sales tax. GTEC is governed by a seven-member board appointed by City Council, of which two are Council members. The City Council maintains budgetary control over the corporation. The City Manager serves as the General Manager of the corporation and the City’s Finance Director acts as the Financial Manager. For financial reporting purposes, GTEC is presented as a blended component unit within City operations because its sole purpose is to utilize sales tax revenues for the improvement of the City’s transportation system. The revenues and expenditures for GTEC are accounted for in a general capital projects fund. The City issues debt on behalf of GTEC in exchange for pledged sales tax revenue that is transferred to the City to reimburse for debt service related to the bonds. GTEC’s debt is shown in the Governmental Activities in the Statement of Net Position. Discretely Presented Component Unit GEDCO has been included in the reporting entity as a discretely presented component unit. GEDCO cannot be considered a blended component unit because the revenues are not only for the benefit of the City. GEDCO was created by the City in May 2005, under the Texas Development Act of 1979 for the purpose of promoting, assisting, and enhancing economic and development activities on behalf of the City. It is funded through voter authorized sales tax. The seven member Board, which includes two City Council members, is appointed by and serves at the discretion of the City Council. City Council approval is required for annual budgets and bonded debt issuance, therefore the City can impose its will on GEDCO. In the event of dissolution, net assets of GEDCO shall be converted to the City. Accordingly, the City accounts for GEDCO as a discretely presented component unit on the government-wide financial statements. City of Georgetown, Texas Notes to Financial Statements 40 GEDCO is audited as part of the City of Georgetown; however, separately issued unaudited financial statements are available through the City of Georgetown’s Finance Department. Related Organizations The Mayor and City Council are responsible for appointing a voting majority of the members of some local boards and commissions, but the City's accountability for these organizations does not extend beyond making the appointments. These entities are the Georgetown Industrial Development Corporation, Georgetown Hospital Authority, Georgetown Housing Authority, and Georgetown Higher Education Finance Corporation. B. Basis of Presentation Basic Financial Statements The basic financial statements include both government-wide financial statements (based on the City as a whole) and fund financial statements. Both sets of financial statements classify activities as either governmental, which are supported by taxes and intergovernmental revenues, or business-type activities, which rely on fees and charges for support. Government-wide Financial Statements The government-wide Statement of Activities demonstrates the degree to which the direct expenses of a given program or function is offset by the program’s revenues. Direct expenses are those that are clearly identifiable with a specific program. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given program and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Taxes and other items not properly included among program revenues are reported instead as general revenues. The effect of interfund activity within the governmental and business-type activities columns has been removed from these statements. Fund Financial Statements The City segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance. Each fund is considered a separate accounting entity and the operations of each fund are accounted for using a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Separate statements are presented for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. These statements present each major fund as a separate column on the fund financial statements; all non-major funds are aggregated and presented in a single column. The government-wide focus is on the sustainability of the City as an entity and the change in net financial position resulting from the activities of the fiscal period. The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories. Each presentation provides a different focus, which allows the reader to compare and analyze the information to enhance the usefulness of the statements. City of Georgetown, Texas Notes to Financial Statements 41 Governmental Fund Types Governmental Funds are those funds through which most governmental functions typically are financed. The measurement focus of governmental funds (in the fund financial statements) is on the sources, uses, and balance of current financial resources and include the General Fund, Special Revenue Funds, Debt Service Fund and Capital Projects Fund. The individual funds are described as follows: Major Governmental Funds General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Georgetown Transportation Enhancement Corporation – This capital projects fund is used to account for the City’s 4B Corporation activities, created to administer the voter approved half-cent sales tax for transportation improvements that aid in economic development efforts. Debt Service Fund - The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. General Capital Projects Fund – This capital projects fund is used to account for financial resources to be used for the acquisition or construction of parks, buildings, and other facilities. Such resources are derived from proceeds of general obligation bonds or other sources of revenue specifically set aside for capital projects. Non-major Governmental Funds Special Revenue Funds - The Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts or major capital projects) that are restricted to expenditures for specified purposes. Proprietary Fund Types The Proprietary Fund Types are used to account for the City's organization and activities which are similar to those often found in the private sector. These funds are financed and operated in a manner similar to private business enterprises – where the intent of the City is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered mainly through user charges; or where the governing body has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary funds principal on-going operations. Operating expenses for the proprietary funds include the cost of personnel and contractual services, supplies and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Major Proprietary Funds Electric Fund – This fund accounts for the City’s electric utility, including operations, maintenance of the infrastructure and expansion of the system within the City’s service territory. Water Services Fund – This fund accounts for the City’s water, sewer and water reuse systems, including operations, contracted maintenance, internal maintenance, expansion of the system within the City’s service territory and the costs of environmental mandates that arise. City of Georgetown, Texas Notes to Financial Statements 42 Non-Major Proprietary Funds Enterprise Funds - The funds that are operated as enterprise funds within the City but are not considered major funds are the Stormwater Drainage and Airport Funds. Internal Service Funds - The Internal Service Funds, which provide services primarily to other funds of the government, are presented in the summary form as part of the proprietary fund financial statements. The financial statements of the internal service funds are allocated in the governmental column when presented at the government-wide level. Various operations are accounted for as internal service funds, such as operational costs associated with automobile and heavy equipment owned by the City and made available to various departments, costs related to maintaining and repairing City owned facilities, operational costs associated with the City's computer equipment within various departments, as well as jointly shared administrative departments. Fiduciary Fund Type – Agency Funds The City’s fiduciary fund is presented in the fund financial statements by type. Since by definition, these assets are being held for the benefit of a third party and cannot be used to address activities or obligations of the government, these funds are not incorporated in the government-wide statements. The City’s fiduciary fund accounts for the operations of Cimarron Hills Public Improvement District in which taxes are received from the taxable value in Cimarron Hills and subsequently disbursed to the developer. It also accounts for the Texas Capital Fund Program whereby lease payments on certain property are received by the City and subsequently disbursed to the State of Texas. C. Measurement Focus/Basis of Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Measurement focus refers to what is being measured and basis of accounting refers to timing of revenue and expenditure recognition in the financial statements. The government-wide statements and fund financial statements for proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting. The agency fund also uses the accrual basis of accounting. The economic resources measurement focus means all assets and liabilities (whether current or non-current) are included on the statement of net position and the operating statements present increases (revenues) and decreases (expenses) in net total position. Under the accrual basis of accounting, revenues are recognized when earned, including unbilled utility services which are accrued. Expenses are recognized at the time the liability is incurred. Governmental fund financial statements are reported using the current financial resources measurement focus and are accounted for using the modified accrual basis of accounting. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenues available if they are collected within sixty (60) days after year-end. Expenditures are recognized when the related fund liability is incurred, if measurable, except for principal and interest on general long-term debt, which are recorded when due, and compensated absences, which are recorded when payable from current available financial resources. City of Georgetown, Texas Notes to Financial Statements 43 Ad valorem, sales, hotel, and franchise tax revenues recorded in the Governmental Fund Types are recognized under the susceptible to accrual concept. Licenses and permits, charges for services, fines and forfeitures, and miscellaneous revenues (except earnings on investments) are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned since they are measurable and available. D. Budgets At least 30 days prior to the end of each fiscal year, the City Manager submits a proposed budget presenting a complete financial plan for the ensuing fiscal year to the City Council (the Council). Public hearings are conducted, at which time all interested persons' comments concerning the budget are heard. The budget must be legally adopted by the Council through passage of an ordinance no later than the 27th day of the last month of the fiscal year. Formal budgetary integration is employed as a management control device during the year for all Governmental and Proprietary Fund Types. Budgets for all funds were legally adopted for the period. Budgetary control is exercised at the division level. All budgets are prepared on the budgetary basis, recognizing encumbrances outstanding at year-end as expenditures against that year’s appropriation. These encumbrances are reconciled to generally accepted accounting principles where appropriate. The Council may transfer any unencumbered appropriation balance or portion thereof from one division, office, department, or agency to another at any time. The City Manager has authority, without Council approval, to transfer appropriation balances from one expenditure account to another within a single division, office, department, or agency of the City; however, unbudgeted transfers between funds are prohibited. The Council may authorize by a majority plus one vote, an emergency expenditure as an amendment to the original budget, but only in a case of grave public necessity, to meet an unusual and unforeseen condition that could not have been included in the original budget through the use of reasonable, diligent thought and attention. The governing body may make changes to the budget for other municipal purposes. Budget amounts are as originally adopted, or as transferred pursuant to authorization of the City Manager or amended by the City Council. Individual amendments were not material in relation to the original appropriations, with the exception of amendments related to capital projects and grant expenditures, whose actual costs were unknown when the budget was adopted. Unencumbered appropriations lapse each year at September 30. The Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General Fund presents a comparison of budgetary data to actual results. The General Fund utilizes the same basis of accounting for both budgetary purposes and actual results, except for the effect of encumbrances and unrealized investment gains and losses, which are reconciled to the actual results for this comparison. E. Encumbrances Encumbrance accounting is employed as an extension of formal budgetary control in all governmental and proprietary funds. Encumbrance accounting is a process whereby purchase orders, contracts and other commitments for the expending of monies are recorded in order to reserve that portion of the applicable appropriation. Outstanding year-end encumbrances are classified as restricted, committed, or assigned components of fund balance, as applicable, and do not constitute expenditures or liabilities because the commitments are carried forward into the subsequent fiscal year. City of Georgetown, Texas Notes to Financial Statements 44 F. Cash and Investments For cash flow purposes, cash and cash equivalents consist of demand deposits, certificates of deposits and deposits in authorized investment pools. The operating cash balances from all funds are consolidated in pooled cash and investment accounts. Excess pooled balances are invested in U.S. Treasury securities, U.S. Government agency securities, fully collateralized money market funds and local government investment pools. Maturities on all investments are consistent with the City’s cash flow requirements. Investments, except for the investment pools, for the City are reported at fair value. The investment pools operate in accordance with appropriate state laws and regulations and are reported at amortized cost. Interest earnings are then allocated to each fund based on average monthly pooled equity balances. Separate cash and investment accounts are maintained for restricted cash such as debt service and bond proceeds reserved for future construction. G. Restricted Assets Certain cash and investments are restricted by various legal and contractual obligations. Included in the restricted assets are capital recovery fees (impact fees) restricted by law for future capital improvements, customer deposits, and specific bond proceeds restricted for use. H. Inventories and Prepaid Items Inventories consist of electric materials, jet fuel, office and other supplies valued at the weighted average cost method and are recognized as expenditures or expenses when used. The prepaid items consist of required payments made to a vendor for a contract in the following fiscal year. These items are accounted for using the consumption method. I. Interfund Receivables and Payables Short-term advances between funds are accounted for in the appropriate interfund receivable and payable accounts. Negative balances incurred in pooled cash at year-end are treated as interfund receivables of the Water Services Fund and interfund payables of the deficit fund. J. Note Receivable Long-term note receivable, which consists of the principal amount of the loan, is reported in the governmental fund statements with an offset to nonspendable fund balance as resources are not available for expenditure. Long-term note receivable reported in the governmental activities on the government-wide statement of net position is not offset by unavailable revenue as it is recorded on an accrual basis at its net realizable value. K. Interfund Transactions All legally authorized transfers have been appropriately presented as interfund transfers and are included in the fund financial statements of both Governmental and Proprietary Fund types. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. City of Georgetown, Texas Notes to Financial Statements 45 L. Intergovernmental Revenues Intergovernmental revenues represent entitlements and shared revenues which are accounted for within the fund financed. Such revenues, received for purposes normally financed through the general government, are accounted for within the Special Revenue Funds. M. Accrued Employee Benefits All employees, with the exception of firefighters, may accumulate a maximum of two times their annual vacation, up to a cap of 240 hours, or 30 days paid upon separation. Firefighters may accrue up to a maximum cap of 360 hours that can be paid out upon separation. Upon termination, non-Civil Service employees will not receive payment of sick leave, unless they have a balance that originated prior to October 1, 2004. These employees were grandfathered under the old policy of receiving payment for one-half of their balance of sick leave up to 60 days at the rate of pay when the hours were banked. Upon termination, Civil Service employees are paid for the balance of their Civil Service sick leave earned after July 30, 2003 or October 31, 2005 (the effective date of the regulations in the City for fire civil service and police civil service employees, respectively), up to a maximum of 720 hours or 1,080 hours for those Firefighters on a 56 hour a week schedule on an annual basis. Civil Service employees hired prior to the effective date of the adoption of Civil Service regulations are also eligible under city policy to receive payment for one-half of their sick leave up to 60 days at the rate of pay when the hours were banked. Accumulated vacation and sick leave, which is expected to be liquidated with expendable available financial resources, is reported as expenditure and a fund liability of the governmental fund that will pay it. Amounts of accumulated vacation leave within governmental funds that are not expected to be liquidated with expendable available financial resources are reported as a long-term liability on the statement of net position. No expenditure is reported for these amounts in the fund financial statements unless the benefits have matured, i.e. unused reimbursable leave still outstanding following an employee’s resignation or retirement. Accumulated vacation and sick leave of proprietary fund types are recorded as an expense and liability of those funds as the benefits accrue to employees. N. Capital Assets Capital Assets other than Streets and Drainage Capital assets, which include property, plant, equipment, and infrastructure assets, are reported in the applicable governmental or business-type activities column in the government-wide financial statements and in the fund financial statements for proprietary funds. All capital assets are valued at their historical cost or estimated historical cost if actual historical cost is not available. Donated assets are valued at their acquisition value on the date donated. Repairs and maintenance are recorded as expenses. Renewals and betterments are capitalized. Assets capitalized, not including infrastructure assets, have an original cost of $5,000 or more and an expected useful life of over one year. Interest incurred during the construction phase of capital assets of business-type activities is capitalized. Interest of $557,554 was capitalized in enterprise funds during the 2017 fiscal year. City of Georgetown, Texas Notes to Financial Statements 46 Depreciation for assets not following the modified approach is computed using the straight-line method on the composite assets based upon the estimated useful lives as follows: Distribution systems 25 to 50 years Buildings and improvements 10 to 20 years Furniture, fixtures, and equipment 3 to 10 years The City records capital contributions to proprietary funds as revenue. Total capital contributions to the enterprise funds in fiscal year 2017 were $12,322,750 and $76,907 in the internal service funds. Contributed capital is not recorded for governmental type funds, but is recognized on the government- wide statements and totaled $3,234,114 for the year ended September 30, 2017. Capital Assets – Streets and Drainage Governmental Accounting Standards Board Statement No. 34 provides for an alternative approach to depreciation for measuring the value of infrastructure assets and the related costs incurred to maintain their service life at a locally established minimum standard. In order to adopt this alternative method, the City must use an asset management system, and must determine if the minimum standards are being maintained. This measurement occurs every three years at a minimum. The City has elected to use this alternative method for reporting its street infrastructure assets. The City contracted with the engineering firm of Kasberg, Patrick and Associates to complete pavement condition surveys for the City’s street network during 2014. The City uses the CarteGraph PavementView Pavement Management Information System to track the condition levels of each of the street sections. The entire streets inventory is captured in the system and the condition of the pavement is based on the following factors: Type of Distress Amount of Distress Severity of Distress Deduct Values (function of the first three) The Pavement Condition Index (PCI) is a measurement scale based upon a condition index ranging from zero for a failed pavement to 100 for pavement with perfect condition. The condition index is used to classify pavement in the following conditions: PCI Rating 100-85 Good 84-45 Fair 44-0 Poor The PCI for fiscal year 2017 is 87. The previous score for 2010-2013 was 88. This will be re-evaluated beginning in October of 2017. The City’s administrative policy is to maintain an average PCI level of 85. An 85 PCI is considered maintaining the streets in a “good” condition. Staff prepares a street maintenance budget that meets this target for Council’s consideration during the budget process. City of Georgetown, Texas Notes to Financial Statements 47 O. Long-term Obligations The portion of long-term general obligation debt used to finance proprietary fund operations and payable from the revenues of the Enterprise Funds is recorded in such funds. General obligation bonds and other forms of long-term debt supported by general revenues are obligations of the City as a whole and not its individual funds. Accordingly, such unmatured obligations of the City are accounted for on the statement of net position and payments of principal and interest relating to the general obligation bonds are recorded as expenditures when they are paid in the fund statements. Self-supporting general obligation debt, which will be repaid from non-general revenue sources, is recorded in the appropriate proprietary fund. P. Pensions For purposes of measuring the net pension liability, pension related deferred outflows and inflows of resources, and pension expense, City specific information about its Fiduciary Net Position in the Texas Municipal Retirement System (TMRS) and additions to/deductions from the City’s Fiduciary Net Position have been determined on the same basis as they are reported by TMRS. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Information regarding the City’s Total Pension Liability is obtained from TMRS through a report prepared for the City by TMRS consulting actuary, Gabriel Roeder Smith & Company, in compliance with Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. Q. Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Specifically, the actuarial calculations used to determine the annual required contributions and related liabilities of the City’s retirement plan and post-employment obligations are based on assumptions about the possibility of events far into the future. Accordingly, actual results could differ from those estimates. R. Risk Financing Activity The City of Georgetown is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omission; injuries to employees; and natural disasters. During fiscal year 2017, the City purchased general liability and property insurance from Texas Municipal League Intergovernmental Risk Pool (TML-IRP). The City pays an annual premium to TML-IRP for such coverage. TML-IRP purchases reinsurance and the City does not retain risks of loss exceeding deductibles. Settled claims have not exceeded insurance coverage in the past three years. The workers compensation plan is administered and paid through the Texas Municipal League- Intergovernmental Risk Pool (TML-IRP). Under this plan, the City does not retain risks of loss exceeding the deductibles. TML-IRP also brokers the City’s Aviation and Underground Storage Tank Pollution liability insurance, as well as, the canine and surgical vet coverage. The City does not retain the risks of loss exceeding the deductibles. City of Georgetown, Texas Notes to Financial Statements 48 S. Credit Risk Financial investments which potentially subject the City to concentrations of credit risk consist principally of cash, investments and accounts receivable. At September 30, 2017, there was not a significant risk arising from cash, investments, or accounts receivable. T. Nature and Purpose of Reservations and Designation of Fund Equity The City’s Fund Balance is the accumulated difference between assets and liabilities within governmental funds, and it allows the City to meet its contractual obligations, fund disaster, or emergency costs, provide cash flow for timing purposes and fund non-recurring expenses appropriated by City Council. The City Council has adopted a financial standard to maintain a General Fund minimum balance of 90 days of budgeted on-going expenditures and 75 days citywide. This policy establishes limitations on the purposes for which Fund Balances can be used in accordance with Governmental Accounting Standards Board (GASB) Statement Number 54. Five Components of Fund Balance Non-spendable Fund Balance – includes inherently non-spendable assets that will never convert to cash, as well as, assets that will not convert to cash soon enough to affect the current financial period. Assets included in this category are prepaid items, inventory, and non-financial assets held for resale. Restricted Fund Balance – represents the portion of fund balance that is restricted to specific purposes that are externally imposed by creditors, grantors, contributors, laws or regulations of other governments, such as hotel/motel tax and bond proceeds. Committed Fund Balance – describes the portion of fund balance that can only be used for specific purposes with constraints imposed by the formal action of the City Council’s adoption of an ordinance, and remains binding unless the City Council removes the limitation. Assigned Fund Balance – is that portion of fund balance that reflects the City’s intended use for a specific purpose but is neither restricted nor committed. Assigned fund balances are determined by City management based on Council direction, in accordance with our financial policies adopted by resolution. Unassigned Fund Balance – represents funds that have not been assigned to any other fund and cannot be properly classified in one of the other four categories within the general fund. City of Georgetown, Texas Notes to Financial Statements 49 Below is the residual classification for the general fund: General Georgetown Transportation Enhancement Corporation Debt Service General Capital Projects Nonmajor Governmental Funds Total Governmental Funds Nonspendable Inventory/prepaids 49,015$ -$ -$ -$ -$ 49,015$ Note receivable 197,633 - - - - 197,633 Spendable Restricted for Debt service - - 1,938,926 - - 1,938,926 Bond funds - - - 17,258,365 - 17,258,365 Hotel/motel tax - - - - 853,337 853,337 Street maintenance tax - - - - 3,422,465 3,422,465 Other purposes - - - - 762,196 762,196 Committed for Contingency 7,925,000 - - - - 7,925,000 Economic stability 1,150,000 1,150,000 Benefit payout 222,000 222,000 Other capital projects - 11,556,682 - - - 11,556,682 Nonmajor funds - - - - 5,405,555 5,405,555 Assigned to Encumbrances 919,906 7,925,430 - 14,198,287 333,207 23,376,830 Unassigned 2,862,071 - - - (495,350) 2,366,721 Total fund balance 13,325,625$ 19,482,112$ 1,938,926$ 31,456,652$ 10,281,410$ 76,484,725$ When both restricted and unrestricted fund balance amounts are available for use, it is the City’s policy to use restricted fund balance first, then unrestricted fund balance. Furthermore, committed fund balances are reduced first, followed by assigned amounts and then unassigned amounts when expenditures are incurred for which amounts in any of those unrestricted fund balance classifications are available. U. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position and/or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has the following items that qualify for reporting in this category. Deferred charges on refundings Pension items: o Differences between expected and actual economic experience o Changes in actuarial assumptions o Difference between projected and actual investment earnings o Contributions to pension plan subsequent to the measurement date City of Georgetown, Texas Notes to Financial Statements 50 In addition to liabilities, the statement of financial position and/or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has only one type of item that qualifies for reporting in this category. Property taxes levied, but not expected to be available to fund obligations in the current period, are recorded as deferred inflows of resources on the balance sheet. V. Net Position Net position represents the difference between assets, liabilities and respective deferred outflow or inflows of resources. A portion of net position represents net investments in capital assets which is the total balance of the City’s investment in capital assets less accumulated depreciation and the outstanding balances of any borrowing spent for that acquisition, construction or improvements of those assets. Net position is reported as restricted when there are limitations imposed on their use either through (1) the enabling legislation adopted by the City, (2) through external restrictions imposed by grantors, or (3) laws or regulations of other governments. Note 2. Cash and Investments For cash flow purposes, cash and temporary investments consist of demand deposits, certificates of deposits, and authorized investment pools. The operating cash balance from all funds is consolidated in pooled cash and investment accounts. Excess pooled balances are invested in U.S. Treasury securities, U.S. Government agency securities, fully collateralized money market funds and local government investment pools. Maturities on all investments are consistent with the City’s cash flow requirements. Investments are recorded at cost. Interest earnings are allocated to each fund based on average monthly pooled equity balances. Separate cash and investment accounts are maintained for restricted cash such as debt service, utility debt reserves, and bond proceeds reserved for future construction. The investment policies of the City are governed by State statutes and a City Council adopted Investment Policy. Major provisions of the City’s investment policy include: responsibility for investments, authorized investments, security dealer selection and qualifying procedures, safekeeping and custodial procedures, statement of investment objectives, and investment reporting requirements. Deposits Texas Statutes require that all bank deposits be insured or fully collateralized by the U.S. government obligations or obligations of the State of Texas and its agencies. Market value of the collateral pledged must equal at least 102% of the bank deposits not covered by federal deposit insurance. At year-end, the carrying amount of the City’s bank deposits was $58,825,165 and the bank balances were $53,907,106, all of which were entirely covered by Federal depository insurance or by collateral held by the City’s agent bank in the City’s name. In order to maximize interest earnings, the City utilizes a controlled disbursement account, which allows the City to deposit only as much money as needed to fund checks presented each day. City of Georgetown, Texas Notes to Financial Statements 51 Investments The City is authorized to invest in certificates of deposit, direct obligations of the U.S. government, U.S. government agency securities, fully collateralized direct repurchase agreements, no-load money market funds whose portfolios meet the City’s investment requirements, and in qualified local government investment pools as approved by the City Council. Non-participating interest earning contracts, including certificates of deposit, and money market accounts are reported at cost. Investments in external investment pools are reported at amortized cost. Interest rate risk is the potential for a decline in market value due to rising interest rates. In compliance with the City’s Investment Policy, as of September 30, 2017, the City minimized the interest rate risk in the portfolio by limiting the weighted average maturity of security types to no longer than two years; structuring the investment portfolio so that securities matured to meet cash requirements for ongoing operations and capital improvement projects; monitoring credit ratings of portfolio positions to assure compliance with rating requirements imposed by the Public Funds Investment Act; and investing operating funds primarily in shorter-term securities and similar government investment pools. The City evaluated all of its cash and investment positions, and determined that it had none subject to recurring fair value recognition or disclosures. The City’s investment balances and weighted average maturity of such investments as of September 30, 2017 are: September 30, 2017 Weighted Average Maturity Investment Pools (at amortized cost) Texas local government investment pool (TexPool) 8,977,662$ 1 Texas short-term asset reserve program (TexSTAR) 61,538,666 1 Investments (at cost) Money market accounts 52,322,314 1 Certificates of deposit 39,884,635 277 Total investments 162,723,277 Portfolio weighted average maturity 69 Carrying amount - demand deposits 13,840,530 Total cash and investments 176,563,807$ Primary Government Credit Risk Credit risk is the possibility that the issuer of a security will fail to make timely payments of interest or principal. In general, the lower the credit quality of a security, the higher the yield, with all other factors being equal. In compliance with the City’s Investment Policy, as of September 30, 2017, the City minimized credit risk losses due to default of security issuer or backer by limiting investments to the safest types of securities; pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisors with which the City will do business; and diversifying the investment portfolio so that potential losses on individual securities were minimized. City of Georgetown, Texas Notes to Financial Statements 52 For short-term liquidity requirements, the City primarily utilizes the Texas Short-Term Asset Reserve Program (TexSTAR). JPMorgan Fleming Asset Management, Inc. and First Southwest Asset Management, Inc. serve as co-administrators under an agreement with the TexSTAR board of directors to provide investment and participant services for this pool. JPMorgan Chase Bank or its subsidiary J.P. Morgan Investor Services Co. provides the custodial, transfer agency, fund accounting, and depository services for this pool. The City also maintains an account with the Texas Local Government Investment Pool (TexPool). Under the TexPool Participation Agreement, administrative and investment services to TexPool are provided by Federated Investors, Inc. through an agreement with the State of Texas Comptroller of Public Accounts. The State of Texas Comptroller of Public Accounts is the sole officer, director, and shareholder of the Texas Treasury Safekeeping Trust Company authorized to operate TexPool. At year end, balances in TexSTAR and TexPool were rated AAAm by Standard & Poor’s. All pools operate on a $1 net asset value basis. In order to maintain a stable $1 price of the fund, the pools will sell portfolio holdings if the ratio of the fair value of the portfolio divided by the book value of the portfolio is less than 0.995 or greater than 1.005. The pools are stated at their measured amortized cost, which is assumed to approximate fair value. Note 3. Taxes Property Taxes Property is appraised and a lien on such property becomes enforceable as of January 1 of each year. Taxes are levied on and payable the following October 1. Taxes become delinquent February 1 of the following year and are subject to interest and penalty charges. Under an agreement which began August 1, 2000, Williamson County Tax Office collects the City's taxes. In the fund financial statements, City property tax revenues are recognized when levied to the extent that they are collected in the current year. Taxes collected prior to the levy date to which they apply are recorded as unearned revenues and recognized as revenue of the period to which they apply. All collections from prior year levies are considered delinquent tax revenue for reporting purposes in the year collected. The allowance for uncollectible taxes at September 30, 2017 was $11,314. The City is permitted by the State of Texas to levy taxes up to $2.50 per $100 of assessed valuation for general government services and for the payment of principal and interest on general long-term debt. The combined current tax rate to finance general government services, including debt service for the fiscal year ended September 30, 2017, was $0.4240 per $100 of assessed valuation. The Williamson Central Appraisal District (Appraisal District) is responsible for the recording and appraisal of property for all taxing units in Williamson County. The Appraisal District is required to assess property at 100% of its appraised value. Real property must be reappraised at least every four years. The City may, at its own expense, require annual reviews by the Appraisal District through various appeals and, if necessary, legal action. Under this system, if the rate, excluding tax rates for bonds and other contractual obligations adjusted for new improvements, exceeds the rate for the previous year by more than 8%, qualified voters of the City may petition for an election to determine whether to limit the tax rate to an increase of no more than 8%. In September 2004, voters approved an initiative to freeze property taxes for homeowners over the age of 65 or disabled. This measure mirrors the State of Texas Constitutional Amendment Proposition 13, which passed overwhelmingly statewide in 2003. Prop 13 gives local governments the option of “freezing” taxes for the elderly and disabled. City of Georgetown, Texas Notes to Financial Statements 53 Sales Taxes The City has adopted the provisions of Article 1066C, Vernon's Texas Civil Statutes, as amended, which grant the City the power to impose and levy a 1% Local Sales and Use Tax within the City. Proceeds of the tax are credited to the General Fund except for sales taxes generated at the airport which are credited to the Airport (Enterprise) Fund. Collections and enforcements are effected through the offices of the Comptroller of Public Accounts, State of Texas, who remits to the City monthly the proceeds of the tax, after deduction of a 2% service fee. On October 1, 2001, the City began collecting an additional half-cent sales tax for its component unit, GTEC, to fund transportation improvements that promote economic development. These funds are reported in the GTEC General Capital Projects Fund, a blended component unit of the City. On April 1, 2003, the City began collecting an additional quarter-cent sales tax in accordance with Texas House Bill 445 to fund maintenance on streets that were in existence at the time the sales tax was adopted by the voters. In November 2010 and again in November 2014, the citizens readopted this quarter-cent sales tax option. The sunset provision will expire in March 2019. These funds are reported in the Streets Special Revenue Fund. On October 1, 2005, the City began collecting an additional eighth-cent sales tax in accordance with the Texas Development Corporation Act of 1979, Article 5190.6, Section 4A Texas Revised Civil Statues for the promotion and development of new and expanded business enterprises. This sales tax is administered through GEDCO. On October 1, 2005, the City began collecting an additional eighth-cent sales tax to be used toward the reduction of ad valorem property taxes. Proceeds are credited to the City’s General Fund. City of Georgetown, Texas Notes to Financial Statements 54 Note 4. Transfers General Fund Debt Service GTEC General Capital Projects Special Revenue Internal Services Nonmajor Enterprise Funds Governmental funds Major funds General fund -$ -$ -$ -$ 2,120,008$ 369,727$ -$ 2,489,735$ GTEC - 2,577,502 - - - - - 2,577,502 General capital projects - - - - 202,632 1,988,000 - 2,190,632 Nonmajor funds Special revenue funds 1,197,201 341,340 521,611 548,463 - 175,000 5,249 2,788,864 Internal service funds - - - - - 25,000 - 25,000 Enterprise funds Major funds Electric 5,131,425 - - - 60,000 71,500 - 5,262,925 Water services 3,025,779 - - - - 290,752 - 3,316,531 Nonmajor funds Nonmajor enterprise funds 237,937 - - - - 376,000 - 613,937 9,592,342$ 2,918,842$ 521,611$ 548,463$ 2,382,640$ 3,295,979$ 5,249$ 19,265,126 Transfers eliminated in government-wide statements 10,076,982 Net transfers - statement of activities 9,188,144$ Total Transfers Out Transfers In Major Funds Governmental Funds Nonmajor Funds Enterprise Funds The net transfers between the governmental types and business types total $9,188,144. Per the City’s fiscal and budgetary policy, utility operations transfer seven percent of gross billings for utility services to the General fund as a payment of the profits of the fund or a return on investment. Other types of transfers include grant matching, fire hydrant testing, equipment purchases, and capital project funding. City of Georgetown, Texas Notes to Financial Statements 55 Note 5. Capital Assets Capital asset activity for the year ended September 30, 2017 was as follows: Balance Deletions Balance 9/30/2016 Additions and Transfers 9/30/2017 Governmental activities Capital assets not being depreciated Land 28,611,637$ -$ 2,469,876$ 31,081,513$ Streets 181,655,391 2,635,244 - 184,290,635 Construction in progress 49,928,216 39,161,566 (14,588,825) 74,500,957 Total capital assets not being depreciated 260,195,244 41,796,810 (12,118,949) 289,873,105 Capital assets being depreciated Equipment 47,056,676 2,630,091 61,700 49,748,467 Buildings 78,284,894 156,967 7,060,218 85,502,079 Improvements 51,682,935 500,349 4,045,181 56,228,465 Total capital assets being depreciated 177,024,505 3,287,407 11,167,099 191,479,011 Less accumulated depreciation for Equipment (30,844,491) (3,277,902) 951,850 (33,170,543) Buildings (14,455,222) (1,188,798) - (15,644,020) Improvements (15,343,883) (1,400,465) - (16,744,348) Total accumulated depreciation (60,643,596) (5,867,165) 951,850 (65,558,911) Total capital assets being depreciated, net 116,380,909 (2,579,758) 12,118,949 125,920,100 Governmental activities capital assets, net 376,576,153$ 39,217,052$ -$ 415,793,205$ Electric activities Capital assets not being depreciated Land and land rights 1,579,511$ 11,193$ -$ 1,590,704$ Construction in progress 223,465 5,156,780 (5,380,245) - Total capital assets not being depreciated 1,802,976 5,167,973 (5,380,245) 1,590,704 Capital assets being depreciated Equipment 2,275,067 293,989 (1,117,025) 1,452,031 Buildings and improvements 73,707 - - 73,707 Distribution system 159,863,312 1,448,523 6,497,270 167,809,105 Total capital assets being depreciated 162,212,086 1,742,512 5,380,245 169,334,843 Less accumulated depreciation for Equipment (1,030,914) (59,066) - (1,089,980) Buildings (39,408) (4,110) - (43,518) Distribution system (41,625,420) (2,789,113) - (44,414,533) Total accumulated depreciation (42,695,742) (2,852,289) - (45,548,031) Total capital assets being depreciated, net 119,516,344 (1,109,777) 5,380,245 123,786,812 Electric activities capital assets, net 121,319,320$ 4,058,196$ -$ 125,377,516$ City of Georgetown, Texas Notes to Financial Statements 56 Capital asset activity for the year ended September 30, 2017 was as follows: Balance Deletions Balance 9/30/2016 Additions and Transfers 9/30/2017 Water services activities Capital assets not being depreciated Land and land rights 1,104,984$ -$ -$ 1,104,984$ Construction in progress 12,535,685 8,123,714 (13,300,637) 7,358,762 Total capital assets not being depreciated 13,640,669 8,123,714 (13,300,637) 8,463,746 Capital assets being depreciated Equipment 923,353 543,103 - 1,466,456 Buildings and improvements 3,669,971 6,461 - 3,676,432 Distribution and water system 325,333,552 9,074,364 13,300,637 347,708,553 Total capital assets being depreciated 329,926,876 9,623,928 13,300,637 352,851,441 Less accumulated depreciation for Equipment (535,214) (70,676) - (605,890) Buildings and improvements (2,159,689) (126,241) - (2,285,930) Distribution and water system (76,246,319) (8,582,801) - (84,829,120) Total accumulated depreciation (78,941,222) (8,779,718) - (87,720,940) Total capital assets being depreciated, net 250,985,654 844,210 13,300,637 265,130,501 Water services activities capital assets, net 264,626,323$ 8,967,924$ -$ 273,594,247$ Other nonmajor business-type activities Capital assets not being depreciated Land 981,500$ -$ -$ 981,500$ Construction in progress 1,212,441 6,795,736 (226,782) 7,781,395 Total capital assets not being depreciated 2,193,941 6,795,736 (226,782) 8,762,895 Capital assets being depreciated Equipment 2,455,037 6,920 - 2,461,957 Buildings and improvements 3,864,907 - (19,176) 3,845,731 Distribution systems 48,790,820 2,036,231 245,958 51,073,009 Total capital assets being depreciated 55,110,764 2,043,151 226,782 57,380,697 Less accumulated depreciation for Equipment (173,737) (11,963) - (185,700) Buildings and improvements (2,143,202) (49,232) - (2,192,434) Distribution systems (14,095,565) (1,400,998) - (15,496,563) Total accumulated depreciation (16,412,504) (1,462,193) - (17,874,697) Total capital assets being depreciated, net 38,698,260 580,958 226,782 39,506,000 Other nonmajor business-type activities capital assets, net 40,892,201$ 7,376,694$ -$ 48,268,895$ City of Georgetown, Texas Notes to Financial Statements 57 Capital asset activity for the year ended September 30, 2017 was as follows: Balance Deletions Balance 9/30/2016 Additions and Transfers 9/30/2017 Total business-type activities Capital assets not being depreciated Land and land rights 3,665,995$ 11,193$ -$ 3,677,188$ Construction in progress 13,971,591 20,076,230 (18,907,664) 15,140,157 Total capital assets not being depreciated 17,637,586 20,087,423 (18,907,664) 18,817,345 Capital assets being depreciated Equipment 5,653,457 844,012 (1,117,025) 5,380,444 Buildings and improvements 7,608,585 6,461 (19,176) 7,595,870 Distribution systems 533,987,684 12,559,118 20,043,865 566,590,667 Total capital assets being depreciated 547,249,726 13,409,591 18,907,664 579,566,981 Less accumulated depreciation for Equipment (1,739,865) (141,705) - (1,881,570) Buildings (4,342,299) (179,583) - (4,521,882) Improvements (131,967,304) (12,772,912) - (144,740,216) Total accumulated depreciation (138,049,468) (13,094,200) - (151,143,668) Total capital assets being depreciated, net 409,200,258 315,391 18,907,664 428,423,313 Total business-type activities capital assets, net 426,837,844$ 20,402,814$ -$ 447,240,658$ Depreciation expense was charged to function/programs of the primary government as follows: Governmental activities Culture / recreation 496,796$ Fire 139,821 General government 1,309,461 Highways and streets 361,671 Police 902,946 Internal service funds 2,656,470 Total depreciation expense governmental activities 5,867,165$ Business-type activities Electric 2,852,289$ Water services 8,779,718 Nonmajor 1,462,193 Total depreciation expense business-type activities 13,094,200$ City of Georgetown, Texas Notes to Financial Statements 58 Governmental Activities Business-type Activities Total Net investment in capital assets Total capital assets (net of accumulated depreciation)415,793,205$ 447,240,658$ 863,033,863$ Less long-term debt and related charges (180,731,021) (110,448,754) (291,179,775) Add unspent bond proceeds 31,456,652 37,446,371 68,903,023 Net long-term debt (149,274,369) (73,002,383) (222,276,752) Net investment in capital assets (net of related debt)266,518,836$ 374,238,275$ 640,757,111$ Note 6. Long-Term Liabilities A. Overview The following is a summary of long-term debt transactions of the City for the fiscal year ended September 30, 2017: Balance 9/30/16 Additions Retirements Balance 9/30/17 Due Within One Year Governmental activities General obligation bonds (payable from tax pledge) $ 157,168,523 $ 22,955,000 $ (9,928,924) $ 170,194,599 $ 10,550,578 Premiums 4,596,657 1,799,285 (375,830) 6,020,112 465,794 Sales tax revenue bonds 7,225,000 - (540,000) 6,685,000 560,000 Compensated absences 5,472,072 1,604,406 (1,684,124) 5,392,354 1,702,724 Net pension liability 18,602,878 950,871 - 19,553,749 - Other post employment benefits 972,877 175,016 - 1,147,893 - Total governmental activities 194,038,007 27,484,578 (12,528,878) 208,993,707 13,279,096 Business-type activities Revenue bonds 72,545,000 27,915,000 (7,730,000) 92,730,000 5,905,000 Premiums 2,943,619 2,479,037 (270,251) 5,152,405 389,307 Compensated absences 931,814 469,542 (400,772) 1,000,584 432,261 Net pension liability 4,397,993 224,804 - 4,622,797 - General obligation bonds (payable from airport, storm- water and electric revenues) 15,286,384 - (1,421,075) 13,865,309 660,809 Total business-type activities 96,104,810 31,088,383 (9,822,098) 117,371,095 7,387,377 Total long-term debt $ 290,142,817 $ 58,572,961 $ (22,350,976) $ 326,364,802 $ 20,666,473 Liabilities for compensated absences, net pension obligation, and other post-employment benefits that are included in governmental activities are expended primarily in the General Fund as benefits are used by the employees. City of Georgetown, Texas Notes to Financial Statements 59 At September 30, 2017, there was $123,930,000 of authorized but unissued general obligation bonds. There are no authorized but unissued revenue bonds. The City is in compliance with all bond ordinances. Fiscal Year Ending September 30, Principal Interest Principal Interest Principal Interest 2018 11,110,578$ 6,044,666$ 6,565,809$ 4,068,442$ 17,676,387$ 10,113,108$ 2019 11,217,070 5,533,001 7,162,930 3,562,755 18,380,000 9,095,756 2020 11,054,526 5,213,037 6,975,474 3,311,113 18,030,000 8,524,150 2021 11,305,801 4,887,620 6,879,199 3,059,168 18,185,000 7,946,788 2022 11,137,875 4,547,279 7,047,125 2,799,369 18,185,000 7,346,648 2023-2027 53,776,397 16,731,380 33,558,603 10,105,395 87,335,000 26,836,775 2028-2032 38,770,493 8,438,492 23,314,507 4,748,498 62,085,000 13,186,990 2033-2037 28,506,859 2,499,218 15,091,662 1,273,610 43,598,521 3,772,828 176,879,599$ 53,894,693$ 106,595,309$ 32,928,350$ 283,474,908$ 86,823,043$ Governmental Business-type Total General Obligation Debt A summary of tax-supported general obligation debt outstanding at September 30, 2017: $4,395,000, 2008 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2028; interest at 3.5% to 4.625% (portion included below) $ 273,354 $5,400,000, 2009 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2029; interest at 3% to 5% (portion included below) 3,735,000 $2,433,565, 2009 General obligation and Refunding bonds due in annual installments through August 15, 2029; interest at 2% to 4.5% (portion included below) 967,090 $2,487,351, 2010 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2029; interest at 1.75% to 4.15% (portion included below) 1,840,000 $1,370,000, 2010 General obligation bonds due in annual installments through August 15, 2029; interest at 3% to 4.5% 1,010,000 $11,930,000, 2010A General obligation bonds due in annual installments through August 15, 2030; interest at 2% to 3.5% 9,230,000 $9,720,000, 2011 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2031; interest at 2% to 4% 6,910,000 $12,500,000, 2012 General obligation bonds due in annual installments through August 15, 2037; interest at 1.5% to 3.625% 11,040,000 City of Georgetown, Texas Notes to Financial Statements 60 $1,650,000, 2012 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2032; interest at 1.5% to 3.375% (portion included below) $ 957,500 $1,016,532, 2012 General obligation and Refunding bonds due in annual installments through August 15, 2029; interest at 0.2% to 3.25% (portion included below) 673,460 $12,500,000, 2012A General obligation bonds due in annual installments through August 15, 2037; interest at 2.0% to 3.25% (portion included below) 11,080,000 $9,500,000, 2013 General obligation bonds due in annual installments through August 15, 2037; interest at 2.0% to 3.375% (portion included below) 8,005,000 $9,646,983, 2013 General obligation and Refunding bonds due in annual installments through August 15, 2025; interest at 2.0% to 4.0% (portion included below) 6,758,580 $4,800,000, 2014 General obligation bonds due in annual installments through August 15, 2034; interest at 2.0% to 3.60% 4,360,000 $1,841,000, 2014 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2034; interest at 3.00% to 3.625%s (portion included below) 1,672,916 $12,112,970, 2014 General obligation and Refunding bonds due in annual installments through August 15, 2027; interest at 2.00% to 4.00% (portion included below) 9,258,655 $4,345,000, 2015 General obligation bonds due in annual installments through August 15, 2035; interest at 3.00% to 4.00% 4,060,000 $3,175,000, 2015 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2035; interest at 2.00% to 3.50% (portion included below) 2,725,000 $4,042,295, 2015 General obligation and Refunding bonds due in annual installments through August 15, 2028; interest at 2.000% to 3.125% (portion included below) 3,003,135 $11,875,000, 2015A General obligation bonds due in annual installments through August 14, 2035; interest at 2.000% to 3.300% 11,095,000 $12,585,000, 2016 General obligation bonds due in annual installments through August 15, 2036; interest at 2.000% to 4.000% 12,190,000 $6,085,000, 2016 Combination tax and revenue certificates of obligation due in annual installments through August 15, 2036; interest at 2.000% to 4.000% (portion included below) 5,800,000 $4,014,840, 2016 General obligation and Refunding bonds due in annual installments through August 15, 2027; interest at 2.000% to 3.000% (portion included below) 3,031,176 $8,555,000, 2017 General obligation bonds due in annual installments through August 15, 2037; interest at 3.125% to 5.000% 8,555,000 $8,655,000, 2017 Combination tax and revenue certificates of obligation due in annual installments through August 15, 2037; interest at 3.000% to 5.000% (portion included below) 8,655,000 Total $ 136,885,866 City of Georgetown, Texas Notes to Financial Statements 61 A summary of self-supporting general obligation debt outstanding at September 30, 2017: $750,000, 2008 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2028; interest at 3.5% to 4.625%; to be paid through monthly Stormwater Drainage fees charged to utility customers within City limits. 46,271$ $1,076,435, 2009 General obligation and Refunding bonds due in annual installments through August 15, 2029; interest at 2% to 4.5%; portion dedicated for Airport Improvements, $58,375, to be paid with Airport fees. Portion dedicated for Stormwater Drainage Improvements, $1,018,060 to be paid through monthly fees charged to utility customers within the City limits. 142,910 $1,010,000, 2010 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2029; interest at 1.75% to 4.15%; to be paid through monthly Stormwater Drainage fees charged to utility customers within City limits. 730,000 $3,035,000, 2010 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2019; interest at 1.75% to 3.1%; paid through Electric utility revenues.785,000 $1,650,000, 2012 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2032; interest at 1.5% to 3.375%; designated for GTEC capital improvements to be paid through revenues from the ½ cent GTEC sales tax. 957,500 $2,165,180, 2012 General obligation and Refunding bonds due in annual installments through August 15, 2029; interest at 0.2% to 3.25%; designated for GTEC capital improvements to be paid through revenues from the ½ cent GTEC sales tax.1,434,448 $5,233,289, 2012 General obligation and Refunding bonds due in annual installments through August 15, 2029; interest at 0.2% to 3.25%; paid through Electric utility revenues. 3,467,093 $4,065,000, 2013 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2033; interest at 2.0% to 3.25%; to be paid through Electric and Water utility revenues. 3,470,000 $442,408, 2013 General obligation and Refunding bonds due in annual installments through August 15, 2025; interest at 2.0% to 4.0%; portion dedicated for Airport Improvements, $254,219, to be paid with Airport fees. Portion dedicated for Stormwater Drainage Improvements, $188,189 to be paid through monthly fees charged to utility customers within the City limits.309,948 $915,616, 2013 General obligation and Refunding bonds due in annual installments through August 15, 2025; interest at 2.0% to 4.0%; designated for GTEC capital improvements to be paid through revenues from the ½ cent GTEC sales tax. 641,472 $459,000, 2014 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2034; interest at 3.00% to 3.625% to be paid through monthly Stormwater Drainage fees charged to utility. 417,087 City of Georgetown, Texas Notes to Financial Statements 62 $162,030, 2014 General obligation and Refunding bonds due in annual installments through August 15, 2027; interest at 2.00% to 4.00% portion dedicated for Airport Improvements, $8,593, to be paid with Airport fees. Portion dedicated for Stormwater Drainage Improvements, $153,438, to be paid through monthly fees charged to utility customers within City limit.154,507$ $12,112,970, 2014 General obligation and Refunding bonds due in annual installments through August 15, 2027; interest at 2.00% to 4.00% designated for GTEC capital improvements to be paid through revenues from the ½ cent GTEC sales tax. 2,291,839 $6,470,000, 2015 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2035; interest at 2.00% to 3.60%; to be paid through annual ad valorem tax levied on all taxable property within the City.6,470,000 $675,297, 2015 General obligation and Refunding bonds due in annual installments through August 15, 2028; interest at 2.0% to 3.125%; portion dedicated for Airport Improvements, $188,168, to be paid with Airport fees. Portion dedicated for Stormwater Drainage Improvements, $487,129 to be paid through monthly fees charged to utility customers within the City limits.501,660 $1,642,408, 2015 General obligation and Refunding bonds due in annual installments through August 15, 2028; interest at 2.0% to 3.125%; designated for GTEC capital improvements to be paid through revenues from the ½ cent GTEC sales tax.1,220,185 $3,070,000, 2015 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2035; interest at 2.00% to 3.50%; portion dedicated for Airport Improvements, $865,000, to be paid with Airport fees. Portion dedicated for Stormwater Drainage Improvements, $2,205,000 to be paid through monthly fees charged to utility customers within the City limits.2,855,000 $745,000, 2015 Combination tax & revenue certificates of obligation due in annual installments through August 15, 2035; interest at 2.00% to 3.50%; paid through water utility revenues.690,000 $10,720,000, 2016 Combination tax and revenue certificates of obligation due in annual installments through August 15, 2036; interest at 2.000% to 3.000%; designated for GTEC capital improvements to be paid through revenues from the 1/2 cent GTEC sales tax. 10,380,000 $1,645,000, 2016 Combination tax and revenue certificates of obligation due in annual installments through August 15, 2036; interest at 2.000% to 3.000%; to be paid through annual ad valorem tax levied on all taxable property within the TIRZ.1,590,000 $240,000, 2016 Combination tax and revenue certificates of obligation due in annual installments through August 15, 2036; interest at 2.000% to 3.000%; to be paid through monthly Stormwater Drainage fees charged to utility customers within City Limits.230,000 $3,410,291, 2016 General obligation and refunding bonds due in annual installments through August 15, 2027; interest at 2.000% to 2.500%; designated for GTEC capital improvements to be paid through revenues from 1/2 cent GTEC sales tax.2,574,750 City of Georgetown, Texas Notes to Financial Statements 63 $84,863, 2016 General obligation and refunding bonds due in annual installments through August 15, 2027; interest at 2.000% to 3.000%; portion dedicated for Airport Improvements, $4,506, to be paid with Airport fees. Portion dedicated for Stormwater Drainage Improvements $80,367 to be paid through monthly fees charged to utility customers withiun City limits.64,372 $5,750,000, 2017 Combination tax and revenue certificates of obligation due in installments through August 15, 2037; interest at 3.000% to 5.000%; designated for GTEC capital improvements to be paid through revenues from 1/2 cent GTEC sales tax.5,750,000$ Subtotal self-supported general obligation debt 47,174,042 Total outstanding general obligation debt as of September 30, 2017 184,059,908$ This amount is reported in the government-wide statements of activities as: Governmental activities 170,194,599$ Business-type activities 13,865,309 184,059,908$ B. Sales Tax Revenue Debt – Georgetown Transportation Enhancement Corporation A summary of sales tax revenue debt outstanding at September 30, 2017 follows: $7,755,000, 2015 Senior lien sales tax revenue bonds due in annual installlments through August 15, 2027; interest at 2.00% to 4.00%; repaid with 1/2 cent sales tax revenue 6,685,000$ Total outstanding sales tax revenue debt as of September 30, 2017 $ 6,685,000 C. Discretely Presented Component Unit Georgetown Economic Development Corporation (GEDCO) participated in the City’s issuance of $18,690,000 Combination Tax and Revenue Certificates of Obligation, Series 2016 and is obligated to pay the City its portion of the principal and interest for the certificates, through 2036. Additionally, GEDCO has received a loan from the Water Services Fund as part of a tri-party agreement for economic development. Repayment of GEDCO’s outstanding long-term liabilities is as follows at September 30, 2017: Fiscal Year Ending Principal Interest 2018 215,485$ 113,697$ 2019 200,568 108,226 2020 511,948 165,164 2021 323,956 95,537 2022 125,000 77,769 2023-2027 705,000 306,844 2028-2032 810,000 196,581 2033-2037 750,000 57,000 3,641,957$ 1,120,818$ GEDCO City of Georgetown, Texas Notes to Financial Statements 64 D. Revenue Debt A summary of revenue bonds outstanding at September 30, 2017: $10,120,000, 2010 Utility System Revenue bonds due in annual installments through August 15, 2029; interest at 3% to 4%7,525,000$ $7,715,000, 2012 Utility System Revenue & Refunding bonds due in annual installments through August 15, 2023; interest at 2% to 4% 4,675,000 $11,855,000, 2014 Utility System Revenue & Refunding bonds due in annual installments through August 15, 2027; interest at 2% to 4% 10,120,000 $13,000,000, 2014 Utility System Revenue bonds due in annual installments through August 15, 2034; interest at 2% to 4% 11,830,000 $5,350,000, 2014 Utility System Revenue bonds due in annual installments through August 15, 2031; interest at 1% to 4% 4,610,000 $10,920,000, 2015 Utility System Revenue & Refunding bonds due in annual installments through August 15, 2035; interest at 3.00% to 3.75% 10,205,000 $9,620,000, 2016 Utility System Revenue bonds due in annual installments through August 15, 2036; interest at 2.000% to 4.000%. 9,330,000 $6,925,000, 2016 Utility System Revenue bonds due in annual installments through August 15, 2028; interest at 3.000% to 4.000% 6,520,000 $27,915,000, 2017 Utility System Revenue bonds due in annual installments through August 15, 2037; interest at 3.000% to 4.000% 27,915,000 Total outstanding revenue debt as of September 30, 2017 $ 92,730,000 All net revenues of the electric and water services system are pledged for the payment of debt service for the revenue bonds. Net revenues, as defined by the various bond ordinances, include income and revenues derived from the operation of the system, after deduction of the amount necessary to pay all operating, maintenance, replacement, and betterment charges of the system. These bond ordinances require that the net revenues, as defined, equal at least 1.25 times the average annual debt service on all revenue bonds. The City complied with this requirement at September 30, 2017. Note 7. Defined Benefit Pension Plan A. Plan Description The City participates as one of 866 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS’s defined benefit pension plan is a tax-qualified plan under Section 401 (a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the city are required to participate in TMRS. City of Georgetown, Texas Notes to Financial Statements 65 B. Benefits Provided TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest, and the city-financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven actuarially equivalent payments options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member’s deposits and interest. A summary of plan provisions for the City are as follows: Employee deposit rate 7% Matching ratio (City to employee) 2 to 1 Years required for vesting 5 Service retirement eligibility 20 years at any age, 5 years at age 60 and above Updated Service Credit 75% Repeating Annuity Increase to retirees 50% of CPU Repeating Employees Covered by Benefit Terms At the December 31, 2015 valuation and measurement date, the following employees were covered by the benefit terms: Retirees or beneficiaries currently receiving benefits 161 Inactive employees entitled to but not yet receiving benefits 208 Active employees 630 999 C. Contributions The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, and the city matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the city. Under the state law governing TMRS, the contribution rate for each city is determined annually by the consulting actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees for the City of Georgetown were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the City of Georgetown were 11.47% and 12.43% in calendar years 2016 and 2017, respectively. The City’s contributions to TMRS for the year ended September 30, 2017 were $5,172,343 and were equal to the required contributions. D. Net Pension Liability The City’s Net Pension Liability (NPL) was measured as of December 31, 2016, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. City of Georgetown, Texas Notes to Financial Statements 66 Actuarial Assumptions The Total Pension Liability in the December 31, 2016 actuarial valuation was determined using the following actuarial assumptions: Inflation 2.5% per year Overall payroll growth 3.0% per year Investment rate of return 6.75%, net pension plan investment expense, including inflation Salary increases were based on a service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Combined Healthy Mortality Tables with Blue Collar Adjustment are used with males rates multiplied by 109% and female rates multiplied by 103% with a three year set-forward for both males and females. In addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by scale BB to account for future mortality improvements subject to the 3% floor. Actuarial assumptions used in the December 31, 2016 valuation were based on the results of actuarial experience studies. This experience study in TMRS was for the period December 31, 2010 through December 31, 2014. Healthy post-retirement mortality rates and annuity purchase rates were updated based on a Mortality Experience Investigation Study covering 2009 through 2011, and dated December 31, 2013. These assumptions were first used in the December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost method. Assumptions are reviewed annually. No additional changes were made for the 2016 valuation. After the Asset Allocation Study analysis and experience investigation study, the Board amended the long-term expected rate of return on pension plan investments from 7% to 6.75% in 2015. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short- term and long-term funding needs of TMRS. City of Georgetown, Texas Notes to Financial Statements 67 The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of real rates of return for each major asset class in fiscal year 2017 are summarized in the following table. Asset Class Domestic equity 17.5% 4.55% International equity 17.5% 6.35% Core fixed income 10.0% 1.00% Non-core fixed income 20.0% 4.15% Real return 10.0% 4.15% Real estate 10.0% 4.75% Absolute return 10.0% 4.00% Private equity 5.0% 7.75% Total 100.0% Target Allocation Long-term Expected Real Rate of Return (Arithmetic) Discount Rate The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. City of Georgetown, Texas Notes to Financial Statements 68 Changes in Net Pension Liability Total Pension Liability Plan Fiduciary Net Position Net Pension Liability (a)(b)(a) - (b) Balance at December 31, 2015 117,620,067$ 94,619,197$ 23,000,870$ Changes for the year Service cost 6,387,917 - 6,387,917 Interest 8,051,567 - 8,051,567 Change of benefit terms - - - Difference between expected and actual experience 486,906 - 486,906 Changes of assumptions - - - Contributions - employer - 4,630,015 (4,630,015) Contributions - employee - 2,798,414 (2,798,414) Net investment income - 6,398,399 (6,398,399) Benefit payments, including refund of employee contributions (3,063,089) (3,063,089) - Administrative expense - (72,218) 72,218 Other changes - (3,891) 3,891 Net changes 11,863,301 10,687,630 1,175,671 Balance at December 31, 2016 129,483,368$ 105,306,827$ 24,176,541$ Increase (Decrease) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City, calculated using the discount rate of 6.75%, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is one- percentage-point lower (5.75%) or one-percentage-point higher (7.75%) than the current rate: 1% Decrease in Discount Rate (5.75%) Discount Rate (6.75%) 1% Increase in Discount Rate (7.75%) City's net pension liability 44,865,350$ 24,176,541$ 7,333,368$ Pension Plan Fiduciary Net Position Detailed information about the pension plan’s Fiduciary Net Position is available in a separately-issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com. City of Georgetown, Texas Notes to Financial Statements 69 E. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2017, the City recognized pension expense of $5,356,114. At September 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred (Inflows) Outflows of Resources Differences between expected and actual economic experience 1,082,032$ Changes in actuarial assumptions 1,375,020 Difference in projected and actual investment earnings 4,114,598 Contributions subsequent to the measurement date 3,833,044 Total 10,404,694$ Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date of $3,833,044 will be recognized as a reduction of the net pension liability for the measurement year ending December 31, 2017 (i.e. recognized in the city’s financial statements September 30, 2018). Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Measurement Year Ended December 31, 2017 1,965,321$ 2018 1,965,319 2019 1,755,566 2020 517,884 2021 309,648 Thereafter 57,912 6,571,650$ Note 8. Other Post-Employment Benefits (OPEB) In addition to the contributions made to TMRS, the City provides certain other post-employment benefits (OPEB) to its retirees and dependents through its health insurance provider, an agent multiple-employer system. Full time employees of the City of Georgetown are eligible to receive continued health benefits and dental and vision coverage for the person and the person’s dependents unless anyone is eligible for coverage through another employer. Retirees of the City are eligible to continue with coverage at the same level they had during employment. Retirees are eligible at age 60 with 5 years of services or at any age with 20 years of service. Other post-employment benefit levels for retirees are the same as coverage provided to active City of Georgetown employees in accordance with the terms and conditions of the current City of Georgetown Health Plan. City of Georgetown, Texas Notes to Financial Statements 70 Other post-employment benefits are funded on a pay-as-you-go basis. The City recognizes the cost of providing these benefits as an expense on the government wide statements. The estimated obligation of providing these benefits was $1,148,194 in 2017, according to a report on the results of the actuarial valuation of assets and benefits values associated with OPEB requirements. This is an increase of $175,618 over last year’s obligation of $972,576. The Projected Unit Credit actuarial cost method is used to calculate the GASB ARC for the City’s retiree health care plan. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The projected unit credit method then provides for a systematic recognition of the cost of these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the unfunded accrued liability. A copy of the Actuarial Valuation Report for the Employee Retirement Benefit Program may be obtained by contacting Gabriel, Roeder, Smith & Company at 5605 N. MacArthur Blvd., Suite 870, Irving, Texas 75038-2631. Annual Other Post-employment Benefits Cost and Net OPEB (Obligation) Asset The City’s annual OPEB cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance within the parameters of GASB Statement No, 45, Accounting and Financial Reporting by Employers for Benefits Other than Pensions (GASB 45). The ARC represents a level of accrual that is projected to recognize the normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The annual OPEB cost for the City’s retiree benefits for the fiscal year ended September 30, 2017 and previous three years, is as follows: 2017 2016 2015 Annual required contribution 222,794$ 216,305$ 199,669$ Interest in OPEB obligation 38,602 31,468 28,216 Adjustment to ARC (37,597) (30,354) (26,142) Annual OPEB cost (expense) end of year 223,799 217,419 201,743 Contributions made (pay as you go)(48,482) (31,242) (42,073) Increase in net OPEB obligation 175,317 186,177 159,670 Net OPEB obligation, beginning of year 972,576 786,700 627,030 Net OPEB obligation, end of year 1,147,893$ 972,877$ 786,700$ City of Georgetown, Texas Notes to Financial Statements 71 Assumptions OPEB Actuarial valuation date December 31, 2015 Actuarial cost method Projected unit credit cost method Amortization method Level as percent of payroll Remaining amortization period 30 years, open amortization Assumed rate of return on investments 4.0% net of expenses Health care cost trend rate Initial rate of 7.5% declining to an ultimate rate of 4.25% after 14 years Payroll growth 3.0% per annum Inflation rate 2.5% per annum The projected unit credit actuarial cost method is used to calculate the GASB 45 ARC for the City’s OPEB. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future benefits are projected. The project unit credit method then provides for a systemic recognition of the cost of these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the unfunded accrued liability. Projections of health benefits are based on the plan as understood by the City and include the types of benefits in force at the valuation date and the pattern of shared benefit costs between the City and its employees to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions used are described in the table above. Actuarial valuations for OPEB plans involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status and the ARC of the City’s retiree health care plan are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information provides multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 and the two preceding years are as follows: Percentage Net OPEB of Annual Year Ended Annual OPEB Employer Obligation OPEB Cost September 30, Cost Contributions End of Year Contributed 2015 201,743$ 42,073$ 786,700$ 20.9% 2016 217,419 31,242 972,877 14.4% 2017 223,799 48,482 1,147,893 21.7% City of Georgetown, Texas Notes to Financial Statements 72 Funded Status The funded status of the City’s OPEB plan under GASB 45 for the past three years is as follows: Unfunded Actuarial Actuarial Percentage Valuation Actuarial Actuarial Accrued Annual of UAAL as of Value of Accrued Liability Funded Covered for Covered December 31, Assets Liability (UAAL) Ratio Payroll Payroll 2014 -$ 1,615,808$ 1,615,808$ 0% 32,235,133$ 5% 2015 - 1,565,706 1,565,706 0% 34,616,326 5% 2016 - 1,565,706 1,565,706 0% 36,878,731 4% Under GASB 45, the City’s retiree health care plan is 0.0% funded with an estimated actuarial accrued liability exceeding actuarial assets $1,565,706 at December 31, 2016. As of that date, the ratio of the unfunded actuarial accrued liability to annual covered payroll is 5.0%. Note 9. Risk Management Health Benefits – On January 1, 2014, the City began a self-funded insurance program for provision of employee health insurance. In fiscal year 2017, the City made contributions to cover 85% of the employees’ costs for medical plan premiums. The employees authorized payroll withholdings to pay the remainder contributions for themselves, and their family members, if elected. In accordance with state statute, the City maintains a catastrophic loss insurance policy (stop-loss policy), which reimburses the City for annual claims totaling over $150,000 per covered individual. For the fiscal year ended 2017, the City received insurance settlements totaling approximately $571,046. The City made no significant reductions in insurance coverage and no settlements have exceeded insurance coverage for the 2017 fiscal year. The City’s contributions for the self-insurance during the year totaled $6,395,033. Estimates of claims payable and of claims incurred but not reported at September 30, 2017 are reflected as accrued expenses of the fund. The liabilities include an amount for claims that have been incurred but were not reported until after September 30, 2017. Because actual claims liabilities depend on such complex factors such as inflation, changes in legal requirements, and damage awards, the process used in computing claims liability is an estimate that could materially change when the claims are ultimately finalized. Analysis of claims liability for the fiscal year 2017 is as follows: Unpaid claims, beginning of year 196,035$ Incurred claims 5,272,579 Claim payments (5,081,725) Unpaid claims, end of year 386,889$ Note 10. Deferred Compensation Plan The City offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. Participation in the plan is optional. The deferred compensation is not available to employees until termination, retirement, death or an unforeseeable emergency. City of Georgetown, Texas Notes to Financial Statements 73 Note 11. Commitments and Contingencies The City is the defendant in a number of lawsuits arising principally in the normal course of operations. In the opinion of management, the outcome of these lawsuits are only reasonably possible to have a material adverse effect on the accompanying combined financial statements, and, as no reasonable estimate can be made no provision for losses has been recorded. The City has the following long-term agreements, which represent significant commitments: A. Wholesale Power Agreements On May 21, 2014, the City settled its lawsuit with the Lower Colorado River Authority (LCRA) that was originally filed in September 2012 regarding its wholesale power agreement (WPA). At that time, Georgetown Utility System (GUS) began to actively manage its energy supply. This settlement ended all future appeals and trials, and cleared the way for the City to secure future power from other sources. Prior to terminating the WPA with LCRA, GUS received almost 90% of its power needs from LCRA, but also had existing contracts with several other suppliers. Beginning on September 13, 2012 GUS began receiving energy from its other suppliers to replace the energy LCRA had planned to serve. GUS also extended its active management of its daily energy supply to cover the larger market exposures, congestion issues, and real time settlements that LCRA previously handled. The City is currently using its long term wind power arrangements with American Electric Power (AEP), until 2028, and Électricité de France Renewable Energy (EDF-RE), until 2035, as well as balancing energy and settlements with Mecuria Energy America (MEA) and Garland Power & Light (GP&L). The City has secured a long term solar power based contract with NRG, and expects to begin receiving that power on July 1, 2018, through 2043. The City expects to be able to maintain low energy rates over the next two decades with these contracts in place. The City began retiring Renewable Energy Credits (RECs) produced by the wind farms against 100% of the Utility’s consumption to officially make all of its customers 100% renewable as of April 2017. B. Brazos River Authority (BRA) Water Contracts Effective September 1, 2001, the City revised its previous water availability agreements with the BRA to further plan for future water needs and to standardize the pricing to a system-wide rate. The effective system-wide rate for BRA’s fiscal year beginning September 1, 2017 is $74 per acre-foot and the City paid a total of $3,194,701 for water during the fiscal year. The City has two separate agreements with the BRA as follows: (1) Lake Georgetown Water – This agreement, effective September 1, 2001 and expiring August 31, 2050, requires BRA to make available to the City 6,720 acre-feet of water per year at BRA’s system wide rate. The City paid $464,800 for water under this agreement in fiscal year 2017. (2) Lake Stillhouse Hollow Water – This agreement, effective September 1, 2001 and expiring August 31, 2040, requires BRA to make available to the City 38,987 acre-feet of water per year at BRA’s system wide rate. The City paid $2,729,901 for water under this agreement in fiscal year 2017. City of Georgetown, Texas Notes to Financial Statements 74 C. Brazos River Authority – Williamson County Regional Raw Water Line Agreement The City is a party to an agreement dated June 30, 1986, with the Brazos River Authority (BRA), City of Round Rock, Jonah Water Special Utility District, and Chisholm Trail Special Utility District (CTSUD). The Brazos River Authority designed, constructed, owns, and operates a pipeline to transport water from Lake Stillhouse Hollow to Lake Georgetown to benefit the parties in the agreement. Total project construction cost for the raw water line was approximately $40,000,000. In 2007, BRA refunded a portion of the original $89,000,000 in debt, leaving approximately $69,000,000 outstanding debt, including principal and interest. Each participant agreed to pay for the annual cost of debt and operations of the line. The City’s obligation is $50,500,000, including principal and interest, to be repaid annually through 2032. The amount for fiscal year 2017 was $1,835,374. The following schedule reflects the principal portion of the City's obligation: Year Ending September 30, 2018 1,834,234$ 2019 1,818,222 2020 2,371,890 2021 2,277,352 2022-2032 21,900,323 30,202,021$ As part of the CTSUD acquisition that occurred on September 12, 2014, the City assumed the ownership interest and related obligations of CTSUD’s portion of this project. D. Chisholm Trail Special Utility District Service Area Operations and Management Agreement In November 2013, the City began managing the Chisholm Trail Special Utility District awaiting regulatory approval of the merger of CTSUD with the City. On September 12, 2014, the City and CTSUD entered into an Asset Transfer and Utility System Consolidation Agreement in which the City began providing water utility services on behalf of CTSUD. Upon the close of this agreement, all CTSUD’s assets (less $500,000 that was to remain with CTSUD), and all liabilities were transferred to the City, and CTSUD’s outstanding debt was defeased. The Certificate of Convenience Necessity (CCN) for the area served by CTSUD was not transferred to the City as part of this transaction. Therefore, in conjunction with this transfer, the City and CTSUD entered into a Service Area Operations and Management Agreement in which the City began providing water utility services on behalf of CTSUD to all customers within the CTSUD CCN. Under this agreement, CTSUD formally adopted the service policies, rates, and fees of the City. The City then bills, collects, and retains water service revenue from CTSUD customers, except for a portion that is remitted to CTSUD Board to offset on- going operational costs. The transfer of the CTSUD CCN from CTSUD to the City of Georgetown received regulatory approval in January 2016. While there has been some legal challenge of the transfer, the City is now the owner and operator of the CCN formerly owned by CTSUD. City of Georgetown, Texas Notes to Financial Statements 75 E. Georgetown Village Public Improvement District In 1999, the City of Georgetown created the Georgetown Village Public Improvement District No. 1, pursuant to Chapter 372 of the Texas Local Government Code. The City is required to construct and provide operation, repair, and maintenance of parks, recreational facilities, alleyways, lighting, landscaping and related improvements to the district that are above the standards that are met elsewhere in the City. Property owners are assessed an annual maintenance assessment of $0.20 per $100 valuation. Assessment revenue of $334,925 was recognized for 2017. As of September 30, 2017, all costs associated with the Georgetown Village Public Improvement District have been reimbursed. F. Cimarron Hills Public Improvement District In May 2000, the City and Paloma Cimarron Hills, L.P. entered into a development agreement for a 606 home, 813 acre subdivision within the City’s Extraterritorial Jurisdiction (ETJ). As part of this agreement, the City created the Cimarron Hills PID to reimburse the developer for costs of certain infrastructure improvements. Each lot within the development is assessed an annual fee based on its type of usage. The City also collects a per unit transportation fee which will be used to fund necessary roadway improvements and bridge crossings in the area. As of September 30, 2017, 316 lots had been sold and 225 homes had been completed for this development. PID assessment collection began in 2002. In 2017, PID assessments were $417,185. The developer was reimbursed $415,179 from current year collections and available fund balance. The assessments and related disbursements are recorded in the Agency Funds. G. Wolf Ranch Towne Center In July 2003, the City approved a development agreement with Simon Properties for the 750,000 sq. ft. Wolf Ranch Towne Center. The project includes Target and 70 other retailers and restaurants. The City’s development agreement with Simon includes a sales tax rebate allowable under Chapter 380 of the Texas Local Government Code. Fifty-three percent of the 1% general operating sales tax revenue generated at the development is rebated to Simon as an economic development incentive. This arrangement continues for 20 years or up to $15,000,000, which funds the public on-site improvements paid by Simon. As part of the agreement, the City provided utility improvements to the site, as well as, funded $10,500,000 of highway improvements for the project. The $10,500,000 was funded with debt to be repaid by Georgetown Transportation Enhancement Corporation (GTEC). Improvements to SH 29, as well as, provide the frontage road for IH-35 were constructed as part of this project. As of September 30, 2017, $6,685,000 of GTEC debt was outstanding for this project. GTEC collects ½ of 1% sales tax, therefore, per the agreement, all related debt service for the GTEC issued bonds, were to be funded with 53% of GTEC (½%) of sales tax generated within the project. City of Georgetown, Texas Notes to Financial Statements 76 H. Wolf Ranch Public Improvement District (PID) In June 2004, the City created Wolf Ranch Public Improvement District (PID) that included all property owned by Simon within the Wolf Ranch development at that time. The purpose of the PID was to provide a backstop for the City. In the event that revenues from the project were insufficient to fund any outstanding debt related to the project, an assessment would be levied against the property in the PID to protect the City from potential revenue shortfalls. Should revenues meet or exceed expectations, no assessment is made. If revenues did not meet expectations, an assessment was made. Any accrued assessment was charged 10% interest until paid. Since inception, the development has not generated enough in GTEC revenues to fund the GTEC debt service requirements under the Agreement. Therefore, an assessment was levied and related interest charges accrued. As a practical matter, the sales tax rebate due to Simon under the 380 agreement is netted against the PID assessment payable. As of September 30, 2017, the balance due from Simon to the PID is $1,056,147, of which $301,626 is interest. In addition, the PID has a $587,298 obligation to the General Fund for the first year assessment, when the General Fund transferred cash to GTEC to fund the Wolf Ranch debt service. I. Gateway Tax Increment Reinvestment Zone (TIRZ) This was established in November 2006 to fund improvements needed for redevelopment of the Williams Drive gateway area. A master plan for the area was developed in 2006, with implementation planned for future years. For the year ending September 30, 2017, total revenues were $40,449 with no expenditures. J. Downtown Tax Increment Reinvestment Zone (TIRZ) This was established in 2004 to fund improvements in the downtown overlay district to assist in funding the downtown master plan. For the year ending September 30, 2017, total revenues were $222,762 with total expenditures of $48,181. K. Rivery Park Tax Increment Reinvestment Zone (TIRZ) This was established in 2008 to fund a convention center/hotel complex, as well as, an expansion to Rivery Park. In January 2014, the City entered into agreements for a 220-room Sheraton hotel and conference center at the 32-acre Rivery site for the development of the Summit at Rivery Park (Rivery) project. This project includes a 16,000 square-foot conference center that can accommodate up to 4,500 people and a public parking garage. Plans for the project include future phases with retail stores, restaurant sites, single-family homes, and multifamily residences for a total project investment of $150,000,000 including $65,000,000 for the hotel, conference center, and parking garage. Private investors will fund most of the project costs. A total of $16,800,000 in future City and County property taxes generated at the site will be used to reimburse the City and the developer for the cost of the hotel and conference center, parking garage, and other public improvements. This includes $12,500,000 of investments by the City and its related entities including GEDCO and GTEC. In December 2014, the city council extended the construction and completion dates for the various development agreements for the project. Ground breaking occurred in February 2015, while the grand opening occurred on July 28, 2016. City of Georgetown, Texas Notes to Financial Statements 77 The City and Williamson County agreed to reimburse up to $25,000,000 for the project. The City will contribute 100% and Williamson County will contribute 80% of their respective incremental ad valorem tax valuation generated at the 32-acre site to fund the project. The City will remit half of the 1% City sales tax generated at the site to Williamson County as part of the agreement. For the year ending September 30, 2017, total revenues were $472,793 with total expenditures of $341,340. L. South Georgetown Tax Increment Reinvestment Zone (TIRZ) The TIRZ is expected to fund up to $50,000,000 of public improvements through December 2044, with an estimated future assessed valuation within the TIRZ in excess of $573,000,000. The City is currently in negotiations with landowners and developers in the area to facilitate and leverage the TIRZ improvements to ensure the success of the project. For the year ending September 30, 2017, total revenues were $127,574 with expenditures of $25,000. M. Chapter 552 Infrastructure Financing Reimbursement Agreement In August 2014, the City entered into a Chapter 552 Infrastructure Financing/Reimbursement Agreement for the Hillwood Wolf Ranch Development Project. This agreement is one of several associated with this project which included the City’s consent to the creation of an In-City Municipal Utility District (MUD) to finance the costs of various improvements. This Chapter 552 agreement, allowable under Chapter 552 of the Local Government Code, facilitates the reimbursement of up to $25,000,000 to the MUD for construction of specified public improvements within the Hillwood Wolf Ranch development. The annual repayment amount is funded from City ad valorem tax revenues received by the City for property within the MUD at a rate of $0.15/per $100 assessed valuation. The terms of this Chapter 552 Agreement continue until dissolution of the MUD or the date on which the City pays the maximum reimbursement amount of $25,000,000, whichever occurs first. Total reimbursement accrued in FY2017 is $7,717. N. Garey Park Trust In June 2014, the City entered into a memorandum of understanding (MOU) whereby Alan Jack Garey donated his 525-acre ranch and home, on the conditions that the property shall be used exclusively as a public park and recreational facility for the benefit of all residents of the City of Georgetown and surrounding areas. The Garey’s deeded 321.45 acres of land to the Texas Parks and Recreation Foundation, in trust for the benefit of the City. The City has an approved lease and agreement with Texas Parks and Recreation Foundation concerning these 321.45 acres. The final 206.57 acres of land, and the house, was deeded to the City. In January 2016, the City entered into the final amendment to the MOU. Construction began on the park in April 2017 and is scheduled to open late Spring – early Summer of 2018. O. Grants Amounts received or receivable from grantor agencies, principally the federal government, are subject to audit and adjustment by the agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. City of Georgetown, Texas Notes to Financial Statements 78 P. Litigation The City is involved in various legal actions in which claims of varying amounts are being asserted against the City. The City follows the practice of providing for these claims only when they become probable and reasonably determinable in amount. In the opinion of City management, these actions will not result in a significant change in the City's financial position. Q. Construction Contracts Encumbrances on construction projects in progress as of September 30, 2017 are approximately $17,816,058 for Governmental Funds and approximately $18,908,293 for Enterprise Funds. Note 12. Financial Hedging In an effort to mitigate the financial and market risk associated with the purchase of natural gas, energy, and congestion price volatility, the City has established a Risk Management Policy. This policy was authorized by the City Council to enter into forward contracts for natural gas, swaps, and congestion rights for the purpose of reducing exposure to natural gas, energy, and congestion price risk. Use of these types of instruments for the purpose of reducing exposure to price risk is performed as a hedging activity. At September 30, 2017, the City had multiple outstanding contracts, with wholesale customers to provide power supply and/or qualified scheduling entity services. For the power supply customers, the City charges an energy charge which is based on the quantity of power supplied multiplied by a fixed price, or multiplied by a fixed heat rate and a fuel index price. In order to hedge the City’s risk, the City has entered into corresponding power supply agreements with counterparties to hedge against energy price or heat rate fluctuation in the market. These contracts meet the definition of a derivative instrument as defined by GASB Statement No. 53, Accounting and Reporting for Derivative Instruments (GASB 53). However, these contracts meet the normal purchases and sales exemption of GASB 53 as the City intends to use the physical commodity in its normal utility operations to supply energy to its customers. Accordingly, these contracts are not within the scope of GASB 53 and are not recorded on the City’s Statement of Net Position. At September 30, 2017, the City maintains a $1,000,000 Letter of Credit at the Electric Reliability Council of Texas (ERCOT) in lieu of maintaining an unsecured deposit with that agency to comply with fiscal surety requirements. Risks Credit Risk. The City’s over-the-counter agreements for natural gas and energy expose the City to credit risk. In the event of default, the City’s operations will not be materially affected. However, the City does not expect the counterparties to fail to meet their obligations. The City maintains contracts with contractual provisions under the EEI (Edison Electric Institute) and EPC (Energy Procurement Contract) agreements. Termination Risk. Termination risk is the risk that a derivative will terminate prior to its scheduled maturity date due to a contractual event. Contractual events include illegality, tax and credit events upon merger and other events. The City’s exposure to termination risk for over-the counter agreements is minimal due to the high credit rating of the counterparties, and the contractual provisions under the EEI and EPC agreements applied to these contracts. Termination risk is associated with all of the City’s derivatives up to their fair value of the instrument. City of Georgetown, Texas Notes to Financial Statements 79 Netting Arrangements. The City enters into netting arrangements whenever it has entered into more than one derivative transaction with counterparty. Under the terms of these arrangements, should one party become insolvent or otherwise default on its obligations, close-out netting provisions permit the non-defaulting party to accelerate and terminate all outstanding transactions and net the transaction’s fair values so that a single sum will be owed by or owed to the non-defaulting party. Note 13. Tax Abatements As of September 30, 2017 the City provides tax abatement to one entity. In November 2006, the City and Williamson County adopted a resolution stating they wanted to participate in a property tax abatement and entered into a 10-year tax abatement agreement with Citigroup, NA, Inc., (CNAI) who constructed a $475,000,000 data center within the City, to abate ad valorem taxes under Chapter 312 of the Texas Tax Code. Section 312.002(a) provides for tax abatement agreements for both new facilities and structures and for the expansion or modernization of existing facilities and structures. The abatement began in tax year 2009 (fiscal year 2008/2009) and the abatement provides for a reduction of assessed values on the real property and the tangible personal property based on a percentage of adjusted value based on tax abatement schedule. A provisions still exists for recapturing abated taxes and includes the following: (1) if CNAI does not meet the minimum employment commitment in any year, the property will be considered taxable for the corresponding year and taxes must be reimbursed. To receive the abatement, CNAI committed to the construction of a new facility with a minimum capital investment of $450,000,000, minimum employment commitment per tax abatement schedule, compliance with performance agreement with Georgetown Economic Development Corp (GEDCO) and minimum ad valorem tax payment of $150,000 on any non-abated taxes due. The Georgetown Economic Development Corporation (GEDCO) also entered into an agreement with Citicorp, NA to fund $1,300,000 of offsite wastewater improvements as an incentive for the creation of 50 jobs. The amount of the abatement for tax year 2016 (fiscal year 2016/2017) is $102,600,000 of appraised market value. As a result of this tax abatement, total tax revenues were decreased by $434,975 for the year ended September 30, 2017. Note 14. Subsequent Events In December 2017, the City issued a general obligation refunding bond, Series 2017 in the amount of $12,940,000. Note 15. Future Financial Reporting Requirements The GASB has issued the following statements which will become effective in future years. Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions – This statement changes the focus of accounting of postemployment benefits other than pensions from whether they are responsibility funding the benefits over time to a point-in-time liability that is reflected on the employer’s financial statements for any actuarially unfunded portion of benefits earned to date. This statement will become effective for the City in fiscal year 2018. 80 This page intentionally left blank. 81 Required Supplementary Information City of Georgetown, Texas Required Supplementary Information For the Fiscal Year Ended September 30, 2017 82 Texas Municipal Retirement System – Schedule of Changes in Net Pension Liability and Related Ratios Measurement Measurement Measurement 2016 2015 2014 Total pension liability Service cost 6,387,917$ 5,660,967$ 4,549,949$ Interest 8,051,567 7,402,393 6,747,717 Changes of benefit terms - - - Difference between expected and actual experience 486,906 903,470 71,207 Changes of assumptions - 1,980,757 - Benefit payments (3,063,089) (2,491,010) (2,652,717) Net change in total pension liability 11,863,301 13,456,577 8,716,156 Total pension liability - beginning 117,620,067 104,163,491 95,447,335 Total pension liability - ending (a)129,483,368$ 117,620,068$ 104,163,491$ Plan fiduciary net position Contributions - employer 4,630,015$ 4,371,324$ 3,800,520$ Contributions - employee 2,798,414 2,592,095 2,256,459 Net investment income 6,398,399 132,967 4,694,918 Benefit payments (3,063,089) (2,491,010) (2,652,717) Administrative expense (72,218) (80,978) (49,007) Other (3,891) (4,000) (4,029) Net change in plan fiduciary net position 10,687,630 4,520,398 8,046,144 Plan fiduciary net position - beginning 94,619,197 90,098,799 82,052,655 Plan fiduciary net position - ending (b)105,306,827 94,619,197 90,098,799 Net pension liability - ending (a) - (b)24,176,541$ 23,000,871$ 14,064,692$ Plan fiduciary net position as a percentage of total pension liability 81.33% 80.44% 86.50% Covered employee payroll 39,775,322$ 37,121,089$ 32,235,133$ Net pension liability as a percentage of covered employee payroll 60.78%61.96%43.63% City of Georgetown, Texas Required Supplementary Information – Continued For the Fiscal Year Ended September 30, 2017 83 Texas Municipal Retirement System – Schedule of Contributions September 30, September 30, September 30, 2017 2016 2015 Actuarially determined contribution 5,172,343$ 4,519,980$ 4,165,570$ Contributions in relation to the actuarially determined contribution 5,172,343 4,519,980 4,165,570 Contribution deficiency (excess)-$ -$ -$ Covered employee payroll 39,775,322$ 37,121,089$ 32,235,133$ Contributions as a percentage of covered employee payroll 13.00% 12.18% 12.92% City of Georgetown, Texas Required Supplementary Information - Continued For the Fiscal Year Ended September 30, 2017 84 Notes to TMRS Schedules TMRS schedules are intended to show information for 10 years, and future years’ information will be displayed as it becomes available. Valuation Date: Actuarial determined contribution rates are calculated as of December 31 and become effective in January, 13 months later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 29 years Asset Valuation Method 10 year smoothed market, 15.00% soft corridor Inflation 2.50% Salary Increases 3.50% to 10.50%, including inflation Investment Rate of Return 6.75% Retirement Age Experience-based table of rates that are specific to the City's plan of benefits. Last updated for the 2015 valuation pursuant to an experience study of the period 2010 – 2014. Mortality RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected on a fully generational basis with scale BB. There were no benefit changes during the year. Other Post-Employment Benefits Unfunded Actuarial Actuarial Percentage Valuation Actuarial Actuarial Accrued Annual of UAAL as of Value of Accrued Liability Funded Covered for Covered December 31, Assets Liability (UAAL) Ratio Payroll Payroll 2014 -$ 1,615,808$ 1,615,808$ 0% 32,235,133$ 5% 2015 - 1,565,706 1,565,706 0% 34,616,326 5% 2016 - 1,565,706 1,565,706 0% 36,878,731 4% Source: Gabriel Roeder Smith & Company, Actuarial Valuation Report Notes to Other Post-Employment Benefit Schedule Actuarial accrued liabilities for years ended 2013 and 2014 are based on a December 31, 2013 study. Actuarial accrued liabilities for years ended 2015 and 2016 are based on a December 31, 2015 study. City of Georgetown, Texas Required Supplementary Information – Continued For the Fiscal Year Ended September 30, 2017 85 Modified Approach for Streets Infrastructure Capital Assets GASB Statement 34 allows the City to use the Modified Approach with respect to infrastructure assets instead of depreciating these assets. The City Council adopted an average PCI level of 85, which is considered “good” condition for a street. The City’s system for reporting assets is fully discussed in Note 1(m) of the notes. The following is additional information for the City’s streets infrastructure for fiscal year 2017. This information is updated every three years and comparative data is included. Condition Rating Segments % of Segments Center Line Miles % of Segments Very Good 90-100 2,020 55.5% 154.1 51.6% Good 80-90 849 23.3%76.5 25.6% Fair 45-80 689 18.9%60.7 20.3% Poor < 45 84 2.3%7.3 2.4% 3,642 100.0% 298.6 100.0% Notes: Center line miles will vary from the total number of center lines due to street segments that were omitted from the survey. Street segments that were either scheduled or currently receiving maintenance were omitted from the street survey. 2005-2007 2008-2010 2011-2013 2014-2017 Arterial 91.91 93.00 89.70 90.00 Collector 88.38 93.75 86.30 86.10 Local 91.00 92.70 87.50 86.50 Overall network 90.87 93.00 87.70 87.30 Fiscal Year Ending September 30,2017 2016 2015 2014 2013 2012 Estimated maintenance cost 4,202,259$ 3,625,000$ 3,570,000$ 2,163,000$ 2,768,631$ 3,448,359$ Budgeted maintenance cost 4,813,259 4,520,000 4,811,850 4,886,030 3,484,079 3,484,079 Actual maintenance cost 4,126,042 4,550,667 4,106,996 4,434,244 3,170,741 3,170,741 Condition Rating Summary PCI Rating by Functional Class Costs to Maintain System at Designated Level 86 This page intentionally left blank. 87 Combining and Individual Fund Financial Statements and Schedules City of Georgetown, Texas Combining and Individual Fund Financial Statements and Schedules – Nonmajor Governmental Funds 88 Special Revenue Funds Special Revenue Funds (SRFs) are used to account for proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The City of Georgetown utilizes multiple SRFs to provide an extra level of transparency and accountability to the taxpayers. Council Discretionary – This SRF was created in July 2015 and includes the projected year-end General Fund balance not allocated in the budget. These funds will be expended at the direction of the City Council for specific one-time purposes. Conservation – is dedicated to energy efficiency programs and projects, and is supported solely by the $1.00 Conservation Fee charged monthly to all City of Georgetown electric customers on their utility bills. This fee is used to maintain compliance with House Bill 3693, which calls for enhancement of existing energy efficiency programs and strengthening of statutory requirements, as well as, to promote more electric demand management by customers. Specific programs supported by the Conservations SRF include Home Energy Audits, Weatherization Programs, and the LED Light Bulb Exchange Program. Court Fees – includes the following SRFs: Court Funds Juvenile Fund The Court Security Fund is used to account for the receipt and expenditure of court costs related to security personnel. The Court Technology Fund is used to finance the purchase or maintenance of technological enhancements for the Municipal Court. Child Safety funds are used to fund school crossing guard programs or other safety activities. All funds are governed by State statute. The Juvenile Case Manager Fund is used for the receipt and expenditure of a court fee that is collected for a juvenile case manager. The fund is to finance the salary, benefits, training, travel expenses, office supplies, and other necessary expenses of the juvenile case manager, as outlined by statute. Development includes the following SRFs: Permitting Fund Community Development Block Grant (CDBG) Fund Main Street Façade Fund The Permitting Fund’s source is technology fees charged to builders and property owners. These fees support the MyPermitNow system which is a comprehensive electronic permit, inspection, and tracking system for all types of construction projects. This system allows for efficient and improved customer service for both the internal and external customers by providing real time online permit information to customers. The CDBG Fund is financed through the US Department of Housing and Urban Affairs Division. CDBG funds are administered through Williamson County and fund infrastructure improvements, such as sidewalks and wastewater lines in eligible geographic areas. The Main Street Façade Fund accounts for grants distributed by the Main Street Board for the improvement of commercial facades in the Downtown Overlay District. Revenue sources include General Fund contributions and fund raising efforts by the Main Street Board. City of Georgetown, Texas Combining and Individual Fund Financial Statements and Schedules – Nonmajor Governmental Funds – Continued 89 Fire – includes the following SRFs: Fire Billing Fund EMS Paramedic Fund The Fire Billing Fund’s revenue is derived from inspections and billing insurance carriers for fire protection services. These funds are used to purchase fire equipment and special needs. Revenues are also used to help fund fire prevention needs and public education. The EMS Paramedic Fund’s revenue is derived from billing insurance carriers for calls for service. The fund tracks costs associated with the City’s operation of the EMS program. Library – accounts for the receipt and expenditure of restricted donations such as memorials and gifts for a designated library purchase or program. Parks – includes the following funds: Tree Fund Parks Restricted Fund Parkland Dedication Cemetery Fund The Tree Fund is financed by fees assessed when development projects remove trees. These funds are used to plant, prune, irrigate, maintain, and fund other associated tree activities in City parks, or other City-owned property. The Parks Restricted Fund is used to account for transfers in, donations, and grants. Funds are used for equipment replacement for parks. The Parkland Dedication Fund was established through the Parkland Dedication Ordinance. When new residential developments are built, the developer is required to dedicate land or pay a fee in lieu of dedication. When a fee is paid, the money is set aside to be used in a restricted zone near the development. The funds must be used for parks and recreation improvements such as new playgrounds, new parks, new trails, or to buy parkland. The Cemetery Fund pays for the ongoing maintenance of the City’s cemeteries. Revenues are generated from plot sales and maintenance fees. In addition, the City Council committed to transfer money in from the General Fund to plan for long-term maintenance. PEG Fee – The Public, Education, and Government (PEG) Fund is used to account for the receipt and expenditure of PEG fees collected through cable providers that are legally restricted for capital expenditures related to the City's cable access channel. Police – includes the following funds: Police Seizures Fund Police Grants Fund Abandoned Vehicle Fund Animal Services Fund City of Georgetown, Texas Combining and Individual Fund Financial Statements and Schedules – Nonmajor Governmental Funds – Continued 90 The Police Seizures Fund is used to account for properties and revenues seized by the Georgetown Police Department. Federal and Texas State Law requires the funds only be used for a defined set of law enforcement purposes such as law enforcement training, crime prevention awareness programs, asset accounting and tracking, and witness-related costs. Purchases of police equipment and facilities equipment are also permitted under state law. The Police Grants Fund is used to account for any related Police grants that may be authorized and expended during the fiscal year. Currently a Texas Department of Transportation grant for a Selective Traffic Enforcement Project (STEP) is passed through at zero balance. The Abandoned Vehicle Fund is used to track costs and related revenues for vehicles that have been impounded and are later auctioned. The Animal Services Fund accounts for donations received from various sources and is used for items and projects that are related to the capital and service needs of the animal shelter. Public Improvement Districts (PIDs) – includes the following funds: Village PID Fund Wolf Ranch PID Fund The Village PID Fund accounts for taxes collected from property assessments in the Georgetown Village PID Tax District. The revenue is used for basic maintenance of parks and open spaces of less than one acre. Basic maintenance of parks one acre and larger are maintained by the City of Georgetown and is not paid for by the PID. Revenue is also used for landscape, nature trails and pedestrian walkways, park benches, trash containers, and entry signs and other similar signs. The Wolf Ranch PID Fund was created to account for the collection of debt service incurred by the issuance of $10,500,000 in sales tax revenue bonds which were used to complete the IH 35 frontage in front of the Wolf Ranch development site. Streets Sales Tax – accounts for the receipt and expenditure of revenues collected from the quarter-cent sales tax approved by the citizens in November 2001 under Texas House Bill 445. The funds are required to be spent on maintenance of streets that were in existence at the time of adoption of the tax. This tax was reauthorized by voters in November of 2006, 2010, and 2014. Tax Increment Reinvestment Zones (TIRZ) – accounts for public improvements within an area that will generate private-sector development. The tax base is frozen at a predevelopment level and the increases in taxes derived from increases in assessed valuations are used to retire bonds originally issued for the development or to leverage future growth in the assigned areas. TIRZ includes the following funds: Downtown TIRZ Rivery TIRZ Gateway TIRZ South Georgetown TIRZ The Downtown TIRZ was created by Ordinance No. 2004-77 and covers approximately 66 (+/-) acres, located entirely in Williamson County and within the corporate limits of the City. This fund is used to account for the development and redevelopment of downtown Georgetown into a mixed use, pedestrian-oriented environment, consistent with the goals of the City’s Downtown Master Plan. City of Georgetown, Texas Combining and Individual Fund Financial Statements and Schedules – Nonmajor Governmental Funds – Continued 91 The Rivery TIRZ was created by Ordinance No. 2011-91, and the duration is through December 31, 2041. This fund is to help provide a financing vehicle necessary to facilitate a program of public improvements to allow and encourage the development of a hotel and conference center, enhance the overall park experience, the establishment of single and multifamily residential development, and commercial/retail space. The Gateway TIRZ was created by Ordinance No. 2006-204, and the duration is through December 31, 2031. This fund is to help finance a program of public improvements to allow and encourage the development and redevelopment of the Williams Drive Gateway area into a mixed use, pedestrian oriented environment, consistent with the goals of the City’s Williams Drive Gateway Redevelopment Plan. The South Georgetown TIRZ was created by Ordinance No. 2014-31 and the duration is through December 31, 2044. The fund will be used to account for public infrastructure necessary to encourage high quality commercial/retail development at the intersection of IH-35 and Westinghouse Road, which is seen as the next major node as growth continues to move north from Round Rock, Texas. Transportation Pass-Through – to account for receipt of expenses and reimbursements for the partnership with Williamson County on the Southwest Bypass project. Tourism – accounts for the receipt and expenditure of funds received by the City from the assessment of the 7% Hotel Occupancy Tax for hotel stays within the City. Eligible expenses are defined by state law and include operating a visitor center, promotion of local cultural sites, and historic preservation. City of Georgetown, Texas Combining Balance Sheet Nonmajor Governmental Funds September 30, 2017 92 Council Discretionary Development Fire ASSETS Cash and cash equivalents 169,917$ 382,333$ 63,530$ 254,165$ 50,745$ 44,689$ Investments 115,891 260,768 25,449 81,446 34,610 14,113 Accounts receivable, net Sales Tax - - - - - - Grants - - - 16,470 - - Other - - - - 1,303,885 - Due from other funds - - 271 - - - TOTAL ASSETS 285,808$ 643,101$ 89,250$ 352,081$ 1,389,240$ 58,802$ LIABILITIES AND FUND BALANCE Accounts payable -$ 1,892$ 4,023$ 7,025$ 35,596$ 2,606$ Due to other funds - - - - 937,005 - Unearned revenue - - - - 968,550 - Total liabilities - 1,892 4,023 7,025 1,941,151 2,606 FUND BALANCE Restricted - - 85,227 - - - Committed - 641,209 - 345,056 - 56,196 Assigned - - - - 34,727 - Unassigned 285,808 - - - (586,638) - Total fund balance 285,808 641,209 85,227 345,056 (551,911) 56,196 TOTAL LIABILITIES AND FUND BALANCE 285,808$ 643,101$ 89,250$ 352,081$ 1,389,240$ 58,802$ Conservation Court Fees Library Restricted 93 Street Sales Parks PEG Fees Police Tax Transportation Tourism Total 1,970,437$ 200,488$ 303,550$ 477,768$ 2,537,154$ 705,360$ 738$ 445,089$ 7,605,963$ 622,243 63,312 - 325,556 1,730,455 222,746 503 303,502 3,800,594 - - - 118 505,550 - - 117,700 623,368 - - 126,624 - - - 609,194 - 752,288 70,780 - - 842,974 - - - - 2,217,639 - - - 476,403 - - - - 476,674 2,663,460$ 263,800$ 430,174$ 2,122,819$ 4,773,159$ 928,106$ 610,435$ 866,291$ 15,476,526$ 15,656$ -$ 12,382$ 4,251$ 1,350,692$ 11,450$ 506,475$ 12,954$ 1,965,002$ - - 4,625 1,064,140 - - - - 2,005,770 - - - 255,794 - - - - 1,224,344 15,656 - 17,007 1,324,185 1,350,692 11,450 506,475 12,954 5,195,116 - 263,800 413,167 - 3,422,467 - - 853,337 5,037,998 2,647,804 - - 798,634 - 916,656 - - 5,405,555 - - - - - - 298,480 - 333,207 - - - - - - (194,520) - (495,350) 2,647,804 263,800 413,167 798,634 3,422,467 916,656 103,960 853,337 10,281,410 2,663,460$ 263,800$ 430,174$ 2,122,819$ 4,773,159$ 928,106$ 610,435$ 866,291$ 15,476,526$ Tax Increment Reinvestment Zones Public Improvement Districts City of Georgetown, Texas Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds For the Fiscal Year Ended September 30, 2017 94 Council Discretionary Conservation Court Fees Development Fire Library Restricted REVENUES Hotel/Motel tax -$ -$ -$ -$ -$ -$ Property assessments - - - - - - Sales tax - - - - - - Fines and forfeitures - - 46,902 - - - Investment income 2,584 3,106 510 1,501 515 335 Donations and grants - - - 83,700 1,135 91,065 Charges for services - - - - 2,435,034 - Other revenue - 292,625 - 166,487 122,840 - Total revenues 2,584 295,731 47,412 251,688 2,559,524 91,400 EXPENDITURES Culture / recreation - - - - - 87,990 Development - - - 127,987 - - Environmental services - 138,869 - - - - Fire services - - - - 2,347,749 - General government - - - - - - Highways and streets - - - - - - Police - - 63,170 - - - Capital outlay - - - 80,285 - - Total expenditures - 138,869 63,170 208,272 2,347,749 87,990 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 2,584 156,862 (15,758) 43,416 211,775 3,410 OTHER FINANCING SOURCES (USES) Transfers in 1,734,779 - 45,381 75,000 49,848 - Transfers out (1,637,249) - - - - - Total other financing sources (uses) 97,530 - 45,381 75,000 49,848 - NET CHANGE IN FUND BALANCE 100,114 156,862 29,623 118,416 261,623 3,410 FUND BALANCES, beginning of period 185,694 484,347 55,604 226,640 (813,534) 52,786 FUND BALANCES, end of period 285,808$ 641,209$ 85,227$ 345,056$ (551,911)$ 56,196$ 95 Parks PEG Fees Police Public Improvement Districts Street Sales Tax Tax Increment Reinvestment Zones Transportation Tourism Total -$ -$ -$ -$ -$ -$ -$ 1,216,063$ 1,216,063$ - - - 811,328 - 636,511 - - 1,447,839 - - - - 3,137,867 - - - 3,137,867 - - - - - - - - 46,902 12,684 1,114 2,845 5,110 18,592 2,725 - 3,182 54,803 1,112,841 - 42,730 - - - 609,194 - 1,940,665 - - - - - - - - 2,435,034 265,742 122,466 109,569 - - 224,344 - 130,075 1,434,148 1,391,267 123,580 155,144 816,438 3,156,459 863,580 609,194 1,349,320 11,713,321 345,279 36,135 - 355,730 - - - 985,014 1,810,148 - - - - - - - - 127,987 - - - - - - - - 138,869 - - - - - - - - 2,347,749 - - - - - 25,000 - - 25,000 - - - - 1,843,908 - 1,027,367 - 2,871,275 - - 202,852 - - - - - 266,022 109,571 - - - - 48,181 - - 238,037 454,850 36,135 202,852 355,730 1,843,908 73,181 1,027,367 985,014 7,825,087 936,417 87,445 (47,708) 460,708 1,312,551 790,399 (418,173) 364,306 3,888,234 275,000 - - - - 202,632 - - 2,382,640 - - - (476,842) (278,463) (386,110) - (10,200) (2,788,864) 275,000 - - (476,842) (278,463) (183,478) - (10,200) (406,224) 1,211,417 87,445 (47,708) (16,134) 1,034,088 606,921 (418,173) 354,106 3,482,010 1,436,387 176,355 460,875 814,768 2,388,379 309,735 522,133 499,231 6,799,400 2,647,804$ 263,800$ 413,167$ 798,634$ 3,422,467$ 916,656$ 103,960$ 853,337$ 10,281,410$ City of Georgetown, Texas Council Discretionary Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 96 REVENUES Investment earnings -$ -$ 2,584$ 2,584$ Other revenue - - - - Other - - - - Total revenues - - 2,584 2,584 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES - - 2,584 2,584 OTHER FINANCING SOURCES (USES) Transfer in 750,000 1,734,779 1,734,779 - Transfers out - (1,637,249) (1,637,249) - Total other financing sources (uses) 750,000 97,530 97,530 - EXCESS OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS 750,000 97,530 100,114 2,584 FUND BALANCE, beginning of period 515,714 185,045 185,694 649 FUND BALANCE - BUDGETARY BASIS, end of period 1,265,714$ 282,575$ 285,808 3,233$ ADJUSTMENTS TO GAAP - FUND BALANCE - GAAP BASIS, end of period 285,808$ Original Budget Variance to Budget Final Budget Actual Budgetary Basis City of Georgetown, Texas Conservation Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 97 Original and Final Budget Actual Budgetary Basis Variance to Budget REVENUES Investment earnings 2,000$ 3,106$ 1,106$ Conservation revenue 290,000 292,625 2,625 Total revenues 292,000 295,731 3,731 EXPENDITURES Operations 304,647 140,988 163,659 Capital outlay - - - Total expenditures 304,647 140,988 163,659 EXCESS OF REVENUES OVER EXPENDITURES (12,647) 154,743 167,390 OTHER FINANCING (USES) Transfers out - - - Total other financing (uses) - - - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING (USES) - BUDGETARY BASIS (12,647) 154,743 167,390 FUND BALANCE, beginning of period 583,908 484,347 (99,561) FUND BALANCE - BUDGETARY BASIS, end of period 571,261$ 639,090 67,829$ ADJUSTMENTS TO GAAP Reserve for encumbrances 2,119 FUND BALANCE - GAAP BASIS, end of period 641,209$ City of Georgetown, Texas Court Fees Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 98 Original and Final Budget Actual Budgetary Basis Variance to Budget REVENUES Court fees 56,828$ 46,902$ (9,926)$ Investment earnings 150 510 360 Total revenues 56,978 47,412 (9,566) EXPENDITURES Personnel 64,185 61,836 2,349 Operations 1,800 1,513 287 Total expenditures 65,985 63,349 2,636 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (9,007) (15,937) (6,930) OTHER FINANCING SOURCES Operating transfers in 60,363 45,381 (14,982) Total other financing sources 60,363 45,381 (14,982) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS 51,356 29,444 (21,912) FUND BALANCE, beginning of period 18,200 55,554 37,354 FUND BALANCE - BUDGETARY BASIS, end of period 69,556$ 84,998 15,442$ ADJUSTMENTS TO GAAP Reserve for encumbrances 179 Reverse voided purchase orders 50 FUND BALANCE - GAAP BASIS, end of period 85,227$ City of Georgetown, Texas Development Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 99 REVENUES Grants and entitlements 135,500$ 135,500$ 83,700$ (51,800)$ Investment earnings 260 260 1,501 1,241 Technology fee - - - - Other 183,000 183,000 166,487 (16,513) Total revenues 318,760 318,760 251,688 (67,072) EXPENDITURES Operations 338,000 338,000 172,885 165,115 Capital outlay 135,500 135,500 28,437 107,063 Total expenditures 473,500 473,500 201,322 272,178 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (154,740) (154,740) 50,366 205,106 OTHER FINANCING SOURCES (USES) Transfers in 75,000 75,000 75,000 - Total other financing sources (uses) 75,000 75,000 75,000 - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS (79,740) (79,740) 125,366 205,106 FUND BALANCE, beginning of period 88,207 88,207 142,617 54,410 FUND BALANCE - BUDGETARY BASIS, end of period 8,467$ 8,467$ 267,983 259,516$ ADJUSTMENTS TO GAAP Reserve for encumbrances 74,054 Reverse voided purchase orders 3,019 FUND BALANCE - GAAP BASIS, end of period 345,056$ Original Budget Final Budget Actual Budgetary Basis Variance to Budget City of Georgetown, Texas Fire Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 100 REVENUES Fire administration -$ -$ -$ -$ Paramedic revenue 2,268,250 2,368,250 2,552,209 183,959 Interest and other 100 100 7,316 7,216 Total revenues 2,268,350 2,368,350 2,559,525 191,175 EXPENDITURES Administrative expenses 40,000 70,000 28,780 41,220 Paramedic program 2,180,168 2,250,168 2,295,095 (44,927) Total expenditures 2,220,168 2,320,168 2,323,875 (3,707) EXCESS OF REVENUES OVER EXPENDITURES 48,182 48,182 235,650 187,468 OTHER FINANCING SOURCES Transfers in 49,846 49,846 49,848 2 Total other financing sources 49,846 49,846 49,848 2 EXCESS OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES - BUDGETARY BASIS 98,028 98,028 285,498 187,470 FUND BALANCE, beginning of period 285,820 285,820 (872,581) (1,158,401) FUND BALANCE - BUDGETARY BASIS, end of period 383,848$ 383,848$ (587,083) (970,931)$ ADJUSTMENTS TO GAAP GAAP adjustment (18,407) Reserve for encumbrances 34,727 Reverse voided purchase orders 18,852 FUND BALANCE - GAAP BASIS, end of period (551,911)$ Original Budget Final Budget Actual Budgetary Basis Variance to Budget City of Georgetown, Texas Library Restricted Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 101 REVENUES Investment earnings 200$ 200$ 335$ 135$ Donations 90,000 90,000 91,065 1,065 Total revenues 90,200 90,200 91,400 1,200 EXPENDITURES Personnel - - - - Operations 170,000 170,000 88,062 81,938 Capital - - - - Total expenditures 170,000 170,000 88,062 81,938 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (79,800) (79,800) 3,338 83,138 FUND BALANCE, beginning of period 52,755 52,755 52,755 - FUND BALANCE - BUDGETARY BASIS, end of period (27,045)$ (27,045)$ 56,093 83,138$ ADJUSTMENTS TO GAAP Reserve for encumbrances 72 Reverse voided purchase orders 31 FUND BALANCE - GAAP BASIS, end of period 56,196$ Original Budget Final Budget Actual Budgetary Basis Variance to Budget City of Georgetown, Texas Parks Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 102 REVENUES Investment earnings 4,500$ 4,500$ 12,684$ 8,184$ Donations 115,000 115,000 1,112,841 997,841 Other 139,500 139,500 265,742 126,242 Total revenues 259,000 259,000 1,391,267 1,132,267 EXPENDITURES Operations 577,000 577,000 328,749 248,251 Capital outlay 446,739 490,630 172,869 317,761 Total expenditures 1,023,739 1,067,630 501,618 566,012 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (764,739) (808,630) 889,649 1,698,279 OTHER FINANCING SOURCES Transfers in 275,000 275,000 275,000 Total other financing sources 275,000 275,000 275,000 - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES - BUDGETARY BASIS (489,739) (533,630) 1,164,649 1,698,279 FUND BALANCE, beginning of period 1,395,036 1,395,036 1,399,036 4,000 FUND BALANCE - BUDGETARY BASIS, end of period 905,297$ 861,406$ 2,563,685 1,702,279$ ADJUSTMENTS TO GAAP Reserve for encumbrances 79,640 Reverse voided purchase orders 3,677 Reverse prior year adjustments 802 FUND BALANCE - GAAP BASIS, end of period 2,647,804$ Original Budget Final Budget Actual Budgetary Basis Variance to Budget City of Georgetown, Texas PEG Fees Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 103 Original and Final Budget Actual Budgetary Basis Variance to Budget REVENUES Investment earnings -$ 1,114$ 1,114$ Other 140,000 122,466 (17,534) Total revenues 140,000 123,580 (16,420) EXPENDITURES Capital outlay 315,589 36,417 279,172 Total expenditures 315,589 36,417 279,172 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (175,589) 87,163 262,752 FUND BALANCE, beginning of period - 176,091 176,091 FUND BALANCE - BUDGETARY BASIS, end of period (175,589)$ 263,254 438,843$ ADJUSTMENTS TO GAAP Reserve for encumbrances 282 Reverse voided purchase orders 264 FUND BALANCE - GAAP BASIS, end of period 263,800$ City of Georgetown, Texas Police Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 104 Original Budget Final Budget Actual Budgetary Basis Variance to Budget REVENUES Investment earnings -$ 1,453$ 2,845$ 1,392$ Donations 15,000 15,000 42,730 27,730 Other - 91,908 109,569 17,661 Total revenues 15,000 108,361 155,144 46,783 EXPENDITURES Operations 135,248 144,850 105,996 38,854 Total expenditures 135,248 144,850 105,996 38,854 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (120,248) (36,489) 49,148 85,637 FUND BALANCE, beginning of period (219,820) (219,820) 327,010 546,830 FUND BALANCE - BUDGETARY BASIS, end of period (340,068)$ (256,309)$ 376,158 632,467$ ADJUSTMENTS TO GAAP Reserve for encumbrances 31,900 Reverse voided purchase orders 1,040 Reverse prior year adjustments 4,069 FUND BALANCE - GAAP BASIS, end of period 413,167$ City of Georgetown, Texas Public Improvement Districts Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 105 Original Budget Final Budget Actual Budgetary Basis Variance to Budget REVENUES Property assessments 834,713$ 834,713$ 811,328$ (23,385)$ Investment earnings 1,500 1,500 5,110 3,610 Total revenues 836,213 836,213 816,438 (19,775) EXPENDITURES Operations 984,436 1,014,436 781,517 232,919 Total expenditures 984,436 1,014,436 781,517 232,919 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (148,223) (178,223) 34,921 213,144 FUND BALANCE, beginning of period 615,271 615,271 678,853 63,582 FUND BALANCE - BUDGETARY BASIS, end of period 467,048$ 437,048$ 713,774 276,726$ ADJUSTMENTS TO GAAP Reserve for encumbrances 71,187 Reverse voided purchase orders 8,750 Reverse prior year adjustments 4,923 FUND BALANCE - GAAP BASIS, end of period 798,634$ City of Georgetown, Texas Street Sales Tax Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 106 Original Budget Final Budget Actual Budgetary Basis Variance to Budget REVENUES Sales tax 2,937,500$ 2,937,500$ 3,137,867$ 200,367$ Investment earnings 10,000 10,000 16,818 6,818 Total revenues 2,947,500 2,947,500 3,154,685 207,185 EXPENDITURES Capital outlay 3,325,000 3,579,259 2,046,350 1,532,909 Total expenditures 3,325,000 3,579,259 2,046,350 1,532,909 EXCESS OF REVENUES OVER EXPENDITURES (377,500) (631,759) 1,108,335 1,740,094 OTHER FINANCING (USES) Transfers out - (278,463) (278,463) - Total other financing (uses)- (278,463) (278,463) - EXCESS OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS (377,500) (910,222) 829,872 1,740,094 FUND BALANCE, beginning of period 2,091,899 2,091,899 2,091,899 - FUND BALANCE - BUDGETARY BASIS, end of period 1,714,399$ 1,181,677$ 2,921,771 1,740,094$ ADJUSTMENTS TO GAAP Net changes in unrealized gains/(losses) on investments 1,774 Prior year purchase order that was not expensed in current year (101) Reserve for encumbrances 498,109 GAAP adjustment 600 Reverse voided purchase orders 314 FUND BALANCE - GAAP BASIS, end of period 3,422,467$ City of Georgetown, Texas Tax Increment Reinvestment Zones Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 107 REVENUES Property assessments 633,124$ 633,124$ 636,511$ 3,387$ Investment earnings - - 2,725 2,725 Other 226,698 226,698 224,344 (2,354) Total revenues 859,822 859,822 863,580 3,758 EXPENDITURES Capital 224,500 402,632 98,681 303,951 Operations - 25,000 25,000 - Total expenditures 224,500 427,632 123,681 303,951 EXCESS OF REVENUES OVER EXPENDITURES 635,322 432,190 739,899 307,709 OTHER FINANCING SOURCES (USES) Transfers in - 202,632 202,632 - Transfers out (394,475) (394,475) (386,110) 8,365 Total other financing sources (uses)(394,475) (191,843) (183,478) 8,365 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS 240,847 240,347 556,421 316,074 FUND BALANCE, beginning of period 135,443 135,443 309,735 174,292 FUND BALANCE - BUDGETARY BASIS, end of period 376,290$ 375,790$ 866,156 490,366$ ADJUSTMENTS TO GAAP Reserve for encumbrances 50,500 FUND BALANCE - GAAP BASIS, end of period 916,656$ Actual Budgetary Basis Final Budget Original Budget Variance to Budget City of Georgetown, Texas Transportation Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 108 REVENUES Other -$ 505,180$ 609,194$ 104,014$ Total revenues - 505,180 609,194 104,014 EXPENDITURES Operations - 609,194 609,194 - Total expenditures - 609,194 609,194 - EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES - (104,014) - 104,014 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES - BUDGETARY BASIS - (104,014) - 104,014 FUND BALANCE, beginning of period (194,520) (194,520) (194,520) - FUND BALANCE - BUDGETARY BASIS, end of period (194,520)$ (298,534)$ (194,520) 104,014$ ADJUSTMENTS TO GAAP Reserve for encumbrances 298,480 FUND BALANCE - GAAP BASIS, end of period 103,960$ Original Budget Final Budget Actual Budgetary Basis Variance to Budget City of Georgetown, Texas Tourism Special Revenue Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis For the Fiscal Year Ended September 30, 2017 109 REVENUES Hotel/motel tax 1,260,000$ 1,260,000$ 1,216,063$ (43,937)$ Investment earnings 1,500 1,500 3,182 1,682 Other 133,000 158,000 130,075 (27,925) Total revenues 1,394,500 1,419,500 1,349,320 (70,180) EXPENDITURES Personnel 359,570 359,570 346,994 12,576 Operations 701,832 726,832 638,258 88,574 Total expenditures 1,061,402 1,086,402 985,252 101,150 EXCESS OF REVENUES OVER EXPENDITURES 333,098 333,098 364,068 30,970 OTHER FINANCING SOURCES (USES) Transfers out (10,200) (10,200) (10,200) - Total other financing sources (uses) (10,200) (10,200) (10,200) - EXCESS OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES - BUDGETARY BASIS 322,898 322,898 353,868 30,970 FUND BALANCE, beginning of period 446,553 430,268 483,705 53,437 FUND BALANCE - BUDGETARY BASIS, end of period 769,451$ 753,166$ 837,573 84,407$ ADJUSTMENTS TO GAAP Reserve for encumbrances 13,793 Reverse voided purchase orders 2,035 Reverse prior year adjustments (64) FUND BALANCE - GAAP BASIS, end of period 853,337$ Actual Budgetary Basis Variance to Budget Original Budget Final Budget 110 This page intentionally left blank. 111 Supplementary Individual Fund Financial Statements and Schedules – Major Governmental Funds City of Georgetown, Texas General Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis Fiscal Year Ended September 30, 2017 112 Actual Original Final Budgetary Variance Budget Budget Basis to Budget REVENUES Taxes Current Property tax 12,475,000$ 12,604,850$ 12,604,850$ -$ Penalties and interest 80,000 81,401 81,401 - Total property tax 12,555,000 12,686,251 12,686,251 - Sales tax 12,818,683 13,595,005 13,595,005 - Franchise taxes 5,142,035 4,648,758 4,973,295 324,537 Other 352,800 363,455 363,455 - Total taxes 30,868,518 31,293,469 31,618,006 324,537 LICENSES AND PERMITS Permits and inspection fees 2,256,110 2,619,253 2,619,254 1 Licenses 20,400 33,225 33,225 - Total licenses and permits 2,276,510 2,652,478 2,652,479 1 CHARGES FOR SERVICES Library 93,452 87,075 87,075 - Animal services 32,040 64,342 64,342 - Parks and recreation 2,190,746 2,357,892 2,357,892 - Environmental services 7,207,193 7,286,448 7,286,448 - Fire protection 1,680,122 1,679,707 1,679,707 - Police support 296,271 362,967 362,967 - Total charges for services 11,499,824 11,838,431 11,838,431 - FINES AND FORFEITURES 566,830 453,675 453,675 - INTEREST AND OTHER Investment income 25,500 75,387 75,837 450 Rent 155,500 376,629 376,629 - Miscellaneous 279,451 344,226 372,540 28,314 Total interest and other 460,451 796,242 825,006 28,764 TOTAL REVENUES 45,672,133 47,034,295 47,387,597 353,302 (continued) City of Georgetown, Texas General Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis – Continued Fiscal Year Ended September 30, 2017 113 Actual Original Final Budgetary Variance Budget Budget Basis to Budget EXPENDITURES Culture recreation Downtown & community service admin Personnel 237,653$ 237,653$ 240,981$ (3,328)$ Operations 246,939 246,939 246,156 (783) Total downtown & community service admin 484,592 484,592 487,137 (2,545) Parks Personnel 1,273,853 1,273,853 1,197,821 76,032 Operations 1,038,506 1,038,506 1,064,373 (25,867) Total parks 2,312,359 2,312,359 2,262,194 50,165 Recreation Personnel 1,325,982 1,325,982 1,316,480 9,502 Operations 1,096,505 1,096,505 1,071,361 25,144 Total recreation 2,422,487 2,422,487 2,387,841 34,646 Recreation programs Personnel 1,011,708 1,011,708 909,197 102,511 Operations 859,253 859,253 885,588 (26,335) Total recreation programs 1,870,961 1,870,961 1,794,785 76,176 Arts & culture Operations 74,385 74,385 74,029 356 Total arts and culture 74,385 74,385 74,029 356 Library Personnel 1,525,538 1,525,538 1,524,621 917 Operations 737,998 737,998 737,992 6 Capital outlay 156,293 156,293 165,641 (9,348) Total library 2,419,829 2,419,829 2,428,254 (8,425) Total culture recreation 9,584,613 9,584,613 9,434,240 150,373 (continued) City of Georgetown, Texas General Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis – Continued Fiscal Year Ended September 30, 2017 114 Actual Original Final Budgetary Variance Budget Budget Basis to Budget Development Planning Personnel 894,340$ 932,936$ 833,146$ 99,790$ Operations 288,396 416,896 217,176 199,720 Total planning 1,182,736 1,349,832 1,050,322 299,510 Inspection services Personnel 1,061,860 1,061,860 938,118 123,742 Operations 105,479 105,479 109,105 (3,626) Total inspection services 1,167,339 1,167,339 1,047,223 120,116 Code enforcement Personnel 331,433 331,433 277,950 53,483 Operations 76,340 76,340 71,713 4,627 Total code enforcement 407,773 407,773 349,663 58,110 Total development 2,757,848 2,924,944 2,447,208 477,736 Environmental services Operations 5,879,717 6,202,801 6,192,028 10,773 Total environmental services 5,879,717 6,202,801 6,192,028 10,773 (continued) City of Georgetown, Texas General Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis – Continued Fiscal Year Ended September 30, 2017 115 Actual Original Final Budgetary Variance Budget Budget Basis to Budget Fire services Support Services Personnel 1,593,550$ 1,593,550$ 1,687,075$ (93,525)$ Operations 825,434 825,434 867,376 (41,942) Total support services 2,418,984 2,418,984 2,554,451 (135,467) Emergency Services Personnel 8,566,727 8,545,427 8,680,821 (135,394) Operations 1,479,368 1,471,587 1,249,725 221,862 Total emergency services 10,046,095 10,017,014 9,930,546 86,468 Total fire services 12,465,079 12,435,998 12,484,997 (48,999) General government Operations 1,467,532 1,467,532 1,948,905 (481,373) Total operations 1,467,532 1,467,532 1,948,905 (481,373) City council Personnel 86,873 106,473 107,974 (1,501) Operations 69,171 31,171 28,808 2,363 Total city council 156,044 137,644 136,782 862 City manager's office Personnel 1,321,786 1,324,495 1,240,182 84,313 Operations 230,534 260,534 197,528 63,006 Total city manager's office 1,552,320 1,585,029 1,437,710 147,319 City's secretary Personnel 356,452 361,022 375,575 (14,553) Operations 301,400 301,400 260,390 41,010 Total city secretary 657,852 662,422 635,965 26,457 Communication office Personnel 269,696 269,696 265,323 4,373 Operations 119,637 119,637 117,100 2,537 Capital outlay (2,000) (2,000) 17 (2,017) Total communication office 387,333 387,333 382,440 4,893 Total general government 4,221,081 4,239,960 4,541,802 (301,842) (continued) City of Georgetown, Texas General Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis – Continued Fiscal Year Ended September 30, 2017 116 Actual Original Final Budgetary Variance Budget Budget Basis to Budget Highways and streets Transportation admin Personnel 434,778$ 434,778$ 407,824$ 26,954$ Operations 219,587 219,587 219,238 349 Capital outlay 47,383 47,383 72,528 (25,145) Total transportation admin 701,748 701,748 699,590 2,158 Streets Personnel 1,327,359 1,327,359 1,172,362 154,997 Operations 1,245,139 1,495,139 1,130,134 365,005 Capital outlay 1,234,000 1,234,000 755,378 478,622 Total streets 3,806,498 4,056,498 3,057,874 998,624 Total highways and streets 4,508,246 4,758,246 3,757,464 1,000,782 Police services Organization and administration Personnel 491,038 491,038 500,130 (9,092) Operations 1,614,018 1,594,099 1,582,057 12,042 Total organization and administration 2,105,056 2,085,137 2,082,187 2,950 Field operations bureau Personnel 9,889,006 9,889,006 9,758,946 130,060 Operations 1,287,285 1,287,285 1,286,717 568 Capital outlay - - - - Total field operations bureau 11,176,291 11,176,291 11,045,663 130,628 Animal services Personnel 659,006 659,006 583,391 75,615 Operations 246,951 259,588 238,362 21,226 Total animal services 905,957 918,594 821,753 96,841 Municipal court Personnel 458,585 458,585 451,194 7,391 Operations 106,035 106,035 98,602 7,433 Total municipal court 564,620 564,620 549,796 14,824 Total police services 14,751,924 14,744,642 14,499,399 245,243 TOTAL EXPENDITURES 54,168,508 54,891,204 53,357,138 1,534,066 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (8,496,375) (7,856,909) (5,969,541) 1,887,368 (continued) City of Georgetown, Texas General Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis – Continued Fiscal Year Ended September 30, 2017 117 Actual Original Final Budgetary Variance Budget Budget Basis to Budget OTHER FINANCING SOURCES (USES) Transfers in 8,505,241$ 9,592,342$ 9,592,342$ -$ Transfers out (1,444,716) (1,512,955) (2,489,735)(976,780) Total other financing sources (uses)7,060,525 8,079,387 7,102,607 (976,780) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS (1,435,850) 222,478 1,133,066 910,588 FUND BALANCE - BUDGETARY BASIS, beginning of period 10,168,638 10,168,638 10,996,406 827,768 FUND BALANCE - BUDGETARY BASIS, end of period 8,732,788$ 10,391,116$ 12,129,472 1,738,356$ ADJUSTMENTS TO GAAP Net changes in unrealized gains/(losses) on investments (1,629) Reserve for encumbrances 919,906 Reverse voided purchase orders 250,569 Reverse prior year adjustments 27,307 FUND BALANCE - GAAP BASIS, end of period 13,325,625$ City of Georgetown, Texas Georgetown Transportation Enhancement Corporation (GTEC) Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis Fiscal Year Ended September 30, 2017 118 Original Budget Final Budget Actual Budgetary Basis Variance to Budget REVENUES Sales tax 5,875,000$ 5,875,000$ 6,275,734$ 400,734$ Grants 3,355,356 3,355,356 2,553,529 (801,827) Investment earnings 50,000 50,000 164,952 114,952 Other - - 7,539 7,539 Total revenues 9,280,356 9,280,356 9,001,754 (278,602) EXPENDITURES Operations 330,895 330,895 329,601 1,294 Principal, interest and fiscal charges 839,150 839,150 961,210 (122,060) Capital outlay 18,155,731 18,155,731 5,017,584 13,138,147 Total expenditures 19,325,776 19,325,776 6,308,395 13,017,381 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (10,045,420) (10,045,420) 2,693,359 7,352,061 OTHER FINANCING SOURCES (USES) Issuance of bonds 6,000,000 6,000,000 5,750,000 (250,000) Premium on issuance of bonds - - 369,010 369,010 Transfers in 553,201 553,201 521,611 (31,590) Transfers out (2,575,604) (2,575,604) (2,577,502) (1,898) Total other financing sources (uses) 3,977,597 3,977,597 4,063,119 85,522 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS (6,067,823) (6,067,823) 6,756,478 12,824,301 FUND BALANCE, beginning of period 11,022,875 11,022,875 11,017,018 (5,857) FUND BALANCE - BUDGETARY BASIS, end of period 4,955,052$ 4,955,052$ 17,773,496 12,818,444$ ADJUSTMENTS TO GAAP Reverse bond interest 2,025 Net changes in unrealized gains/(losses) on investments (3,530) GAAP adjustment (433,217) Reduce restricted fund balance 540,000 Reserve for encumbrances 1,240,430 Reverse voided purchase orders 356,286 Reverse prior year adjustments 6,622 FUND BALANCE - GAAP BASIS, end of period 19,482,112$ City of Georgetown, Texas Debt Service Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis Fiscal Year Ended September 30, 2017 119 Original Budget Final Budget Actual Budgetary Basis Variance to Budget REVENUES Ad valorem taxes 12,000,000$ 12,000,000$ 11,975,432$ (24,568)$ Investment earnings 2,000 2,000 60,186 58,186 Total revenues 12,002,000 12,002,000 12,035,618 33,618 EXPENDITURES AND OTHER FINANCING SOURCES (USES) Principal, interest and fiscal charges (14,804,714) (14,804,714) (14,881,601) (76,887) OTHER FINANCING SOURCES (USES) Transfers in 2,916,878 2,916,878 2,918,842 1,964 Total other financing sources (uses) 2,916,878 2,916,878 2,918,842 1,964 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS 114,164 114,164 72,859 (41,305) FUND BALANCE, beginning of period 1,543,287 1,543,287 1,866,091 322,804 FUND BALANCE - BUDGETARY BASIS, end of period 1,657,451$ 1,657,451$ 1,938,950 281,499$ ADJUSTMENTS TO GAAP Net changes in unrealized gains/(losses) on investments (24) FUND BALANCE - GAAP BASIS, end of period 1,938,926$ City of Georgetown, Texas General Capital Projects Fund Schedule of Revenues and Expenditures (Budget Basis) – Budget and Actual (Non-GAAP) – Reconciled to GAAP Basis Fiscal Year Ended September 30, 2017 120 Original Budget Final Budget Actual Budgetary Basis Variance to Budget REVENUES Investment earnings 75,000$ 75,000$ 317,415$ 242,415$ Grants and donations 5,000,000 5,020,546 312,300 (4,708,246) Other 300,000 370,000 109,550 (260,450) Total revenues 5,375,000 5,465,546 739,265 (4,726,281) EXPENDITURES Capital outlay 25,065,883 40,257,315 23,372,002 16,885,313 Bond issuance cost - - 340,973 (340,973) Total expenditures 25,065,883 40,257,315 23,712,975 16,544,340 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (19,690,883) (34,791,769) (22,973,710) 11,818,059 OTHER FINANCING SOURCES (USES) Issuance of bonds 12,060,000 18,290,000 18,640,276 350,276 Sale of property 3,475,000 3,475,000 - (3,475,000) Transfers in - 548,463 548,463 - Transfers out (1,988,000) (2,190,632) (2,190,632) - Total other financing sources (uses)13,547,000 20,122,831 16,998,107 (3,124,724) EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES AND OTHER FINANCING SOURCES (USES) - BUDGETARY BASIS (6,143,883) (14,668,938) (5,975,603) 8,693,335 FUND BALANCES, beginning of period 6,143,883 14,668,938 23,551,319 8,882,381 FUND BALANCES - BUDGETARY BASIS, end of period -$ -$ 17,575,716 17,575,716$ ADJUSTMENTS TO GAAP Net changes in unrealized gains/(losses) on investments (9,534) Reserve for encumbrances 14,198,287 Reverse voided purchase orders 44,042 GAAP adjustments (581,774) Reverse prior year adjustments 229,915 FUND BALANCES - GAAP BASIS, end of period 31,456,652$ 121 Combining Financial Statements – Nonmajor Proprietary Funds City of Georgetown, Texas Combining Financial Statements Nonmajor Proprietary Funds 122 Enterprise Funds – The City's utilities are accounted for and operated in a manner similar to private business enterprises. Each utility accounted for as an independent entity, is an enterprise fund. Enterprise fund accounting is used where the intent of the City Council is to finance or recover the costs of providing goods or services to the general public on a continuing basis primarily through user charges or when the City Council has decided that periodic determination of net income is appropriate for accountability purposes. Airport Fund – used to account for revenues and expenses related to the operation and maintenance of the City's airport. Stormwater Drainage Fund – used to account for revenues and expenses related to the operations, capital projects, and debt service of the stormwater drainage facilities. Internal Service Funds – This fund is used to account for services performed by one government organization or department for others. Fleet Services Fund – The City uses this fund to purchase and account for all major equipment and vehicles. Each item is assigned an annual lease value which the leasing department pays to the Internal Service Fund. The annual lease value is determined by the projected replacement cost divided by the years of useful life of the item. The payments made by the departments enable the Internal Service Fund to replace equipment and vehicles on a pre-planned schedule to minimize maintenance costs and reduce safety risks due to worn out equipment and vehicles. The fund also provides maintenance for all vehicles through the Vehicle Service Center. Joint Services Fund – The Joint Services Fund is composed of departments which provide services to more than one city fund. Charges for services provided are determined by allocating each specific department's cost to the using fund. Facilities Maintenance Fund – The City uses this fund to account for janitorial service, light maintenance, painting, landscape maintenance and roofing and air conditioning repairs for all City buildings. Each building is assigned an annual maintenance cost, which is paid to the Internal Service Fund by the occupying departments, based on square footage occupied. The payments made by the departments enable the Internal Service Fund to provide major and minor facility repairs on a preplanned schedule to minimize maintenance costs and provide preventative care to reduce long-term maintenance and replacement costs. Information Technology Fund – The City uses this fund to account for purchases and maintenance of the City's computer systems. Each department pays an annual predetermined lease payment, based upon the equipment the department has. These payments enable the fund to replace older equipment and upgrade the City's computer resources and provide assistance in maintenance of equipment. This fund also provides for the management of the City's computer systems through personnel in the Information Services department. Self-Insurance Fund – The City uses this account for its self-insurance program providing health insurance to employees and their family members. City of Georgetown, Texas Combining Statement of Net Position Nonmajor Enterprise Funds September 30, 2017 123 Stormwater Total Nonmajor Airport Drainage Enterprise Fund Fund Funds ASSETS Current assets Cash and cash equivalents -$ 95,145$ 95,145$ Cash and cash equivalents - restricted 461,378 1,065,403 1,526,781 Investments - restricted 145,698 366,489 512,187 Accounts receivable Services (net of allowance for uncollectibles)73,585 435,506 509,091 Other - 27,123 27,123 Prepaid expenses 128,343 - 128,343 Inventories 49,683 - 49,683 Total current assets 858,687 1,989,666 2,848,353 Capital assets Land and land rights 981,500 - 981,500 Distribution system 5,989,819 45,083,190 51,073,009 Buildings and improvements 3,845,731 - 3,845,731 Machinery, furniture and equipment 2,403,921 58,036 2,461,957 Streets Construction in progress 7,741,190 40,205 7,781,395 Less accumulated depreciation (7,454,632) (10,420,065) (17,874,697) Total capital assets (net of accumulated depreciation)13,507,529 34,761,366 48,268,895 Total noncurrent assets 13,507,529 34,761,366 48,268,895 TOTAL ASSETS 14,366,216 36,751,032 51,117,248 DEFERRED OUTFLOWS OF RESOURCES Deferred outflow related to pension 37,556 137,489 175,045 Deferred charge on refunding 22,878 46,305 69,183 TOTAL DEFERRED OUTFLOWS OF RESOURCES 60,434 183,794 244,228 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 14,426,650$ 36,934,826$ 51,361,476$ LIABILITIES AND NET POSITION Current liabilities Accounts payable 38,273$ 62,787$ 101,060$ Accrued employee benefits 5,219 28,623 33,842 Unearned revenue - 10,487 10,487 Current portion of long-term debt 84,215 424,258 508,473 Accrued interest 4,818 18,337 23,155 Total current liabilities 132,525 544,492 677,017 Noncurrent liabilities Accrued employee benefits 7,898 36,804 44,702 Net pension liability 72,380 264,971 337,351 Long-term debt payable 1,094,797 3,982,670 5,077,467 Total noncurrent liabilities 1,175,075 4,284,445 5,459,520 Total liabilities 1,307,600 4,828,937 6,136,537 Net position Net investment in capital assets 12,351,395 30,400,743 42,752,138 Unrestricted 767,655 1,705,146 2,472,801 Total net position 13,119,050 32,105,889 45,224,939 TOTAL LIABILITIES AND NET POSITION 14,426,650$ 36,934,826$ 51,361,476$ City of Georgetown, Texas Combining Statement of Revenues, Expenses and Changes In Fund Net Position Nonmajor Enterprise Funds Fiscal Year Ended September 30, 2017 124 Total Stormwater Nonmajor Airport DrainageEnterprise Fund Fund Funds OPERATING REVENUES Other 3,318,983$ 3,409,626$ 6,728,609$ Total operating revenues 3,318,983 3,409,626 6,728,609 OPERATING EXPENSES Depreciation 200,630 1,261,563 1,462,193 Other 2,880,715 2,459,667 5,340,382 Total operating expenses 3,081,345 3,721,230 6,802,575 NET OPERATING INCOME (LOSS)237,638 (311,604) (73,966) NONOPERATING REVENUES (EXPENSES) Investment income 2,709 11,795 14,504 Donations and grants 5,926,282 3,584 5,929,866 Interest and fiscal charges (41,663) (161,594) (203,257) Other 49,107 - 49,107 Total nonoperating revenues (expenses)5,936,435 (146,215) 5,790,220 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 6,174,073 (457,819) 5,716,254 CONTRIBUTIONS AND TRANSFERS Capital contributions - 2,036,231 2,036,231 Transfer in 5,249 - 5,249 Transfers out (25,000) (588,937) (613,937) Total contributions and transfers (19,751) 1,447,294 1,427,543 CHANGE IN NET POSITION 6,154,322 989,475 7,143,797 TOTAL NET POSITION, beginning of period 6,964,728 31,116,414 38,081,142 TOTAL NET POSITION, end of period 13,119,050$ 32,105,889$ 45,224,939$ City of Georgetown, Texas Combining Statement of Cash Flows Nonmajor Enterprise Funds Fiscal Year Ended September 30, 2017 125 Stormwater Total Airport Drainage Nonmajor Fund Fund Enterprise Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 3,312,960$ 3,409,868$ 6,722,828$ Payments to suppliers (1,934,018) (1,874,771) (3,808,789) Payments to employees for services (340,894) (560,749) (901,643) Net cash provided by operating activities 1,038,048 974,348 2,012,396 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in 5,249 - 5,249 Transfers out (25,000) (588,937) (613,937) Net cash provided by (used for) noncapital financing activities (19,751) (588,937) (608,688) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (647,424) (270,231) (917,655) Donations, grants, and other 99,107 - 99,107 Principal paid on revenue and certificates of obligation bonds (103,696) (420,913) (524,609) Interest paid on revenue and certificates of obligation bonds (41,932) (160,789) (202,721) Net cash used in capital and related financing activities (693,945) (851,933) (1,545,878) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 2,709 11,795 14,504 Change in temporary investments (15,098) (73,829) (88,927) Net cash used in investing activities (12,389) (62,034) (74,423) Net change in cash and cash equivalents 311,963 (528,556) (216,593) CASH AND CASH EQUIVALENTS, beginning of year 149,415 1,689,104 1,838,519 CASH AND CASH EQUIVALENTS, end of year 461,378$ 1,160,548$ 1,621,926$ NON-CASH DISCLOSURE OF CAPITAL ACTIVITY Developer contributions -$ 2,036,231$ 2,036,231$ Noncash grants received 5,876,282$ -$ 5,876,282$ OPERATING INCOME (LOSS)237,638$ (311,604)$ (73,966)$ Adjustments to reconcile operating income (loss) to cash provided by (used in) operating activities Depreciation 200,630 1,261,563 1,462,193 Decrease (increase) in inventories (7,913) - (7,913) Decrease (increase) in accounts receivable (6,023) 242 (5,781) Decrease (increase) in prepaid expenses 652,828 - 652,828 Increase (decrease) in accounts payable (39,084) 11,891 (27,193) Increase (decrease) in net pension liability - 12,886 12,886 Increase (decrease) in accrued employee benefits (28) (630) (658) Net cash provided by (used in) operating activities 1,038,048$ 974,348$ 2,012,396$ City of Georgetown, Texas Combining Statement of Net Position Internal Service Funds September 30, 2017 126 Fleet Joint Facilities Information Self Services Services Maintenance Technology Insurance Fund Fund Fund Fund Fund Total ASSETS Current Cash and cash equivalents 3,577,996$ 1,040,836$ 1,263,983$ 1,217,813$ 2,752,913$ 9,853,541$ Investments 1,129,893 328,685 399,153 384,573 869,341 3,111,645 Prepaid expense - 30,557 - - 368,069 398,626 Accounts receivable 143 376,950 2,193 179 - 379,465 Inventories - 664,707 - - - 664,707 Total current assets 4,708,032 2,441,735 1,665,329 1,602,565 3,990,323 14,407,984 Property and equipment Land and land rights - 214,066 - - - 214,066 Buildings and improvements 26,181 813,681 1,173,704 - - 2,013,566 Machinery, furniture and equipment 27,282,746 1,217,644 1,452,486 6,904,447 - 36,857,323 Units in progress - - - 63,894 - 63,894 Total property and equipment cost 27,308,927 2,245,391 2,626,190 6,968,341 - 39,148,849 Less accumulated depreciation (15,737,007) (2,003,737) (1,980,639) (5,991,253) - (25,712,636) Net property and equipment 11,571,920 241,654 645,551 977,088 - 13,436,213 TOTAL ASSETS 16,279,952$ 2,683,389$ 2,310,880$ 2,579,653$ 3,990,323$ 27,844,197$ LIABILITIES AND NET POSITION Liabilities Current liabilities Accounts payable 36,481$ 1,108,346$ 156,624$ 126,831$ 402,004$ 1,830,286$ Accrued employee benefits 16,724 - 11,361 36,150 - 64,235 Unearned revenue - 351,728 - - 351,728 Due to other funds 2,250 - - - 233,069 235,319 Total current liabilities 55,455 1,460,074 167,985 162,981 635,073 2,481,568 Noncurrent liabilities Accrued employee benefits 22,473 - 13,880 47,229 - 83,582 Total liabilities 77,928 1,460,074 181,865 210,210 635,073 2,565,150 Net position Net investment in capital assets 11,571,920 241,654 645,551 977,088 - 13,436,213 Unrestricted 4,630,104 981,661 1,483,464 1,392,355 3,355,250 11,842,834 Total net position 16,202,024 1,223,315 2,129,015 2,369,443 3,355,250 25,279,047 TOTAL LIABILITIES AND NET POSITION 16,279,952$ 2,683,389$ 2,310,880$ 2,579,653$ 3,990,323$ 27,844,197$ City of Georgetown, Texas Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds Fiscal Year Ended September 30, 2017 127 Fleet Joint Facilities Information Self Services Services Maintenance Technology Insurance Fund Fund Fund Fund Fund Total OPERATING REVENUES Charges for services 3,061,908$ 14,710,446$ 3,307,199$ 5,164,113$ 7,947,719$ 34,191,385$ OPERATING EXPENSES Administration - 1,388,472 - - - 1,388,472 Accounting - 793,429 - - - 793,429 City wide HR services - 367,603 - - - 367,603 Conservation - 596,709 - - - 596,709 Customer care - 3,381,873 - - - 3,381,873 Economic development administration - 412,507 - - - 412,507 Engineering support - 933,194 - - - 933,194 Facilities maintenance contracts - - 1,952,757 - - 1,952,757 Facilities maintenance services - - 786,135 - - 786,135 Finance and administration - 849,646 - - - 849,646 Fleet services operations 529,420 - - - - 529,420 Human resources - 793,295 - - - 793,295 Information technology - - - 2,058,149 - 2,058,149 Information technology capital replacement & contracts - - - 2,724,138 - 2,724,138 Joint services contracts - 1,877,097 - - - 1,877,097 Legal services - 954,053 - - - 954,053 Main street - 115,808 - - - 115,808 Medical insurance - - - - 6,814,234 6,814,234 Purchasing - 714,600 - - - 714,600 Service center 1,351,461 - - - - 1,351,461 Systems engineering - 1,713,599 - - - 1,713,599 Depreciation 2,046,407 13,230 136,535 460,298 - 2,656,470 Total operating expenses 3,927,288 14,905,115 2,875,427 5,242,585 6,814,234 33,764,649 NET OPERATING INCOME (LOSS)(865,380) (194,669) 431,772 (78,472) 1,133,485 426,736 NONOPERATING REVENUES (EXPENSES) Investment income 23,603 7,069 8,177 6,704 13,512 59,065 Gain on disposal of assets 164,839 - - - - 164,839 Other 40,058 65,476 917 179 2,266 108,896 Total nonoperating revenues (expenses)228,500 72,545 9,094 6,883 15,778 332,800 INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS (636,880) (122,124) 440,866 (71,589) 1,149,263 759,536 CONTRIBUTIONS AND TRANSFERS Capital contributions 63,712 - 7,400 5,795 - 76,907 Transfers in 2,685,501 582,139 25,000 3,339 - 3,295,979 Transfers out - (25,000) - - - (25,000) Total contributions and transfers 2,749,213 557,139 32,400 9,134 - 3,347,886 CHANGE IN NET POSITION 2,112,333 435,015 473,266 (62,455) 1,149,263 4,107,422 NET POSITION, beginning of period 14,089,691 788,300 1,655,749 2,431,898 2,205,987 21,171,625 NET POSITION, end of period 16,202,024$ 1,223,315$ 2,129,015$ 2,369,443$ 3,355,250$ 25,279,047$ City of Georgetown, Texas Combining Statement of Cash Flows Internal Service Funds Fiscal Year Ended September 30, 2017 128 Fleet Joint Facilities Information Self Services Services Maintenance Technology Insurance Fund Fund Fund Fund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES Department contributions 3,266,662$ 14,338,795$ 3,306,991$ 5,164,113$ 7,949,985$ 34,026,546$ Payments to suppliers (1,502,739) (5,712,358) (2,260,624) (3,152,272) (6,665,216) (19,293,209) Payments to employees for services (661,289) (8,721,226) (522,705) (1,886,853) - (11,792,073) Net cash provided by (used in) operating activities 1,102,634 (94,789) 523,662 124,988 1,284,769 2,941,264 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in 2,685,501 582,139 25,000 3,339 - 3,295,979 Transfers out - (25,000) - - - (25,000) Net cash provided by noncapital financing activities 2,685,501 557,139 25,000 3,339 - 3,270,979 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (2,234,380) (9,853) (170,773) (131,851) - (2,546,857) Net cash (used) for capital and related financing activities (2,234,380) (9,853) (170,773) (131,851) - (2,546,857) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 23,603 7,069 8,177 6,704 13,512 59,065 Change in temporary investments 504,790 144,590 267,700 450,491 344,178 1,711,749 Net cash provided by (used in) investing activities 528,393 151,659 275,877 457,195 357,690 1,770,814 Net increase (decrease) in cash 2,082,148 604,156 653,766 453,671 1,642,459 5,436,200 CASH AND CASH EQUIVALENTS, beginning of year 1,495,848 436,680 610,217 764,142 1,110,454 4,417,341 CASH AND CASH EQUIVALENTS, end of year 3,577,996$ 1,040,836$ 1,263,983$ 1,217,813$ 2,752,913$ 9,853,541$ NON-CASH DISCLOSURE Developer contributions received 63,712$ -$ 7,400$ 5,795$ -$ 76,907$ OPERATING INCOME (LOSS)(865,380)$ (194,669)$ 431,772$ (78,472)$ 1,133,485$ 426,736$ Adjustments to reconcile operating income (loss) to cash provided by (used in) operating activities: Depreciation 2,046,407 13,230 136,535 460,298 - 2,656,470 Gain on disposal of asset 164,839 - - - - 164,839 Other income 40,058 65,476 917 179 2,266 108,896 Decrease (increase) in prepaid expenses - - - - (48,000) (48,000) Decrease (increase) in inventories - 47,209 - - - 47,209 Decrease (increase) in accounts receivable (143) (341,800) (1,125) (179) - (343,247) Increase (decrease) in accounts payable (283,109) 411,092 (42,741) (261,621) 197,018 20,639 Increase (decrease) in unearned revenue - (95,327) - - - (95,327) Increase (decrease) in accrued employee benefits (38) - (1,696) 4,783 - 3,049 Net cash provided by (used in) operating activities 1,102,634$ (94,789)$ 523,662$ 124,988$ 1,284,769$ 2,941,264$ 129 Supplementary Individual Fund Financial Statements City of Georgetown, Texas Agency Funds Statement of Changes in Assets and Liabilities Fiscal Year Ended September 30, 2017 130 Balance Balance October 1,September 30, 2016 Additions Deductions 2017 Public improvement districts Assets Cash and cash equivalents 18,686$ 471,007$ 459,831$ 29,862$ Total assets 18,686$ 471,007 459,831 29,862 Liabilities Accounts payable 18,686$ 471,007$ 459,831$ 29,862$ Total liabilities 18,686$ 471,007$ 459,831$ 29,862$ Texas capital fund repayments Assets Accounts receivable 68,454$ -$ 50,000$ 18,454$ Total assets 68,454$ -$ 50,000$ 18,454$ Liabilities Due to other governments 68,454$ -$ 50,000$ 18,454$ Total liabilities 68,454$ -$ 50,000$ 18,454$ Total agency funds Assets Cash and cash equivalents 18,686$ 471,007$ 459,831$ 29,862$ Accounts receivable 68,454 - 50,000 18,454 Total assets 87,140$ 471,007$ 509,831$ 48,316$ Liabilities Accounts payable 18,686$ 471,007$ 459,831$ 29,862$ Due to other governments 68,454 - 50,000 18,454 Total liabilities 87,140$ 471,007$ 509,831$ 48,316$ 131 Statistical Section (Unaudited) 132 This page intentionally left blank. City of Georgetown, Texas Statistical Section (Unaudited) 133 This part of the City of Georgetown's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Contents: Financial Trend ......................................................................................................................................................... 134 These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity ................................................................................................................................................. 144 These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity ......................................................................................................................................................... 154 These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information ......................................................................................................... 168 These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information ........................................................................................................................................... 172 These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report related to the services the government provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. City of Georgetown, Texas Net Position by Component Last Ten Fiscal Years (Accrual Basis of Accounting) 134 2017 2016 2015 2014 Governmental activities Net investment in capital assets 266,518,836$ 254,289,833$ 239,377,879$ 211,305,899$ Restricted 6,423,693 4,958,105 3,958,088 824,704 Unrestricted 35,069,898 27,598,778 20,056,114 33,401,250 Total governmental activities net assets 308,012,427$ 286,846,716$ 263,392,081$ 245,531,853$ Business-type activities Net investment in capital assets 374,238,275$ 380,034,944$ 328,886,853$ 287,569,126$ Unrestricted 63,291,864 27,740,653 48,127,105 57,575,322 Total business-type activities net assets 437,530,139$ 407,775,597$ 377,013,958$ 345,144,448$ Primary government Net investment in capital assets 640,757,111$ 634,324,777$ 568,264,732$ 498,875,025$ Restricted 6,423,693 4,958,105 3,958,088 824,704 Unrestricted 98,361,762 55,339,431 68,183,219 90,976,572 Total primary government net assets 745,542,566$ 694,622,313$ 640,406,039$ 590,676,301$ 135 2013 2012 2011 2010 2009 2008 174,798,105$ 144,196,394$ 138,536,744$ 144,725,810$ 138,048,388$ 129,354,365$ 1,109,220 26,064,001 30,407,806 23,615,403 26,858,729 25,011,217 40,995,207 28,542,479 21,859,346 15,909,956 14,563,686 16,470,172 216,902,532$ 198,802,874$ 190,803,896$ 184,251,169$ 179,470,803$ 170,835,754$ 230,939,554$ 220,809,992$ 210,252,907$ 197,910,197$ 187,953,410$ 167,724,995$ 36,040,786 37,049,395 30,771,961 35,786,263 33,507,546 29,144,912 266,980,340$ 257,859,387$ 241,024,868$ 233,696,460$ 221,460,956$ 196,869,907$ 405,737,659$ 365,006,386$ 348,789,651$ 342,636,007$ 326,001,798$ 297,079,360$ 1,109,220 26,064,001 30,407,806 23,615,403 26,858,729 25,011,217 77,035,993 65,591,874 52,631,307 51,696,219 48,071,232 45,615,084 483,882,872$ 456,662,261$ 431,828,764$ 417,947,629$ 400,931,759$ 367,705,661$ City of Georgetown, Texas Changes in Net Position Last Ten Fiscal Years (Accrual Basis of Accounting) 136 2017 2016 2015 2014 EXPENSES Governmental activities Culture-recreation 11,904,166$ 12,128,222$ 11,003,525$ 10,438,052$ Development 2,561,792 2,805,625 2,317,907 2,037,449 Fire 16,113,850 15,089,501 11,731,142 10,378,471 General government 5,959,340 6,348,544 5,435,195 5,239,050 Police 16,537,297 15,938,090 13,284,900 12,862,736 Streets 7,376,116 8,270,333 6,463,416 9,486,497 Environmental services 6,325,688 5,964,867 5,700,681 5,097,618 Interest on long-term debt 5,826,012 4,455,057 5,061,021 5,738,394 Total governmental activities expenses 72,604,261 71,000,239 60,997,787 61,278,267 Business-type activities Airport 3,123,008 2,655,035 2,838,401 3,289,827 Electric 66,383,559 59,649,218 59,043,948 60,073,430 Environmental services - - - - Stormwater 3,882,824 3,844,129 2,983,286 2,638,430 Water 39,960,102 36,679,504 33,360,468 24,158,727 Total business-type activities expenses 113,349,493 102,827,886 98,226,103 90,160,414 Total primary government expenses 185,953,754$ 173,828,125$ 159,223,890$ 151,438,681$ PROGRAM REVENUES Governmental activities Charges for services Culture-recreation 2,534,735$ 2,781,283$ 2,506,592$ 3,146,318$ Development 2,653,201 2,666,369 2,510,092 1,942,914 Fire 4,116,783 3,718,280 1,740,719 1,200,894 General government 356,455 1,155,218 1,321,261 1,474,961 Police 743,304 200,276 831,461 805,728 Streets 4,124,813 843,386 625 1,021 Environmental services 7,329,850 7,380,876 6,811,773 5,266,815 Operating grants and contributions 470,604 397,920 642,448 286,431 Capital grants and contributions 5,612,025 12,784,076 17,701,672 23,901,801 Total governmental activities program revenues 27,941,770 31,927,684 34,066,643 38,026,883 Business-type activities Charges for services Airport 3,318,983 2,905,729 2,631,211 3,254,368 Electric 70,109,269 66,916,207 63,197,781 60,319,235 Environmental services - - - - Stormwater 3,409,626 3,277,508 2,638,945 2,487,548 Water 42,729,980 45,485,151 43,488,320 33,659,956 Operating grants and contributions - - 25,056 25,056 Capital grants and contributions 32,180,271 25,104,637 9,405,360 76,095,951 Total business-type activities program revenues 151,748,129 143,689,232 121,386,673 175,842,114 Total primary government program revenues 179,689,899$ 175,616,916$ 155,453,316$ 213,868,997$ Net (expense)/revenue Governmental activities (44,662,491)$ (39,072,555)$ (26,931,144)$ (23,251,384)$ Business-type activities 38,398,636 40,861,346 23,160,570 85,681,700 Total primary government net expense (6,263,855)$ 1,788,791$ (3,770,574)$ 62,430,316$ 137 2013 2012 2011 2010 2009 2008 9,775,209$ 9,328,048$ 9,393,530$ 9,076,669$ 8,696,162$ 6,978,982$ 1,650,530 2,284,858 2,374,321 2,345,178 2,381,380 2,457,868 9,144,092 8,634,002 8,110,294 7,196,359 6,835,927 5,553,135 6,447,308 4,851,250 5,293,370 5,201,299 5,107,748 3,604,501 12,042,349 11,522,334 11,029,444 10,787,024 11,026,676 9,595,062 5,459,183 5,564,690 6,522,933 5,730,682 4,372,708 3,147,899 4,855,404 4,830,921 4,339,101 4,206,166 4,287,029 - 3,806,106 4,375,653 3,656,673 3,624,733 3,650,386 4,181,243 53,180,181 51,391,756 50,719,666 48,168,110 46,358,016 35,518,690 3,171,550 3,012,745 3,751,193 2,811,206 2,441,533 3,459,377 46,543,022 56,407,348 54,289,631 50,756,369 48,444,272 48,183,299 - - - - - 4,315,729 2,204,172 1,905,019 1,970,307 1,799,680 1,807,147 1,689,013 22,844,363 21,597,278 22,224,364 20,124,249 20,011,184 18,980,021 74,763,107 82,922,390 82,235,495 75,491,504 72,704,136 76,627,439 127,943,288$ 134,314,146$ 132,955,161$ 123,659,614$ 119,062,152$ 112,146,129$ 2,425,587$ 2,285,209$ 2,252,608$ 2,150,107$ 1,481,954$ 1,391,416$ 1,659,670 1,668,635 905,118 1,125,058 827,387 1,232,533 1,433,679 1,137,982 1,032,663 1,195,871 1,409,208 1,044,870 1,261,561 1,206,994 435,926 487,264 5,121 1,418,786 959,027 895,703 1,009,004 1,265,589 1,154,135 1,344,259 1,125 - - - - - 6,059,904 5,491,495 5,116,570 4,809,271 4,582,794 - 256,593 956,438 962,183 405,023 1,268,957 492,632 5,999,666 2,431,374 4,422,720 2,747,483 1,600,980 909,209 20,056,812 16,073,830 16,136,792 14,185,666 12,330,536 7,833,705 2,906,267 2,881,144 3,388,816 2,435,613 2,234,637 3,308,889 54,743,979 59,344,615 58,535,067 60,136,705 57,164,312 52,846,962 - - - - - 4,398,047 2,206,108 2,132,810 2,036,047 1,959,007 1,913,546 1,832,165 27,244,363 26,596,509 27,142,648 22,022,414 23,541,415 23,313,864 25,589 147,601 127,051 - - - 4,558,296 3,917,721 2,062,382 4,842,643 17,378,138 11,071,907 91,684,602 95,020,400 93,292,011 91,396,382 102,232,048 96,771,834 111,741,414$ 111,094,230$ 109,428,803$ 105,582,048$ 114,562,584$ 104,605,539$ (33,123,369)$ (35,317,926)$ (34,582,874)$ (33,982,444)$ (34,027,480)$ (27,684,985)$ 16,921,495 12,098,010 11,056,516 15,904,878 29,527,912 20,144,395 (16,201,874)$ (23,219,916)$ (23,526,358)$ (18,077,566)$ (4,499,568)$ (7,540,590)$ City of Georgetown, Texas Changes In Net Position Last Ten Fiscal Years – Continued (Accrual Basis Of Accounting) 138 2017 2016 2015 2014 GENERAL REVENUES AND OTHER CHANGES IN NET POSITION Governmental activities Property tax 24,734,830$ 22,815,206$ 20,650,114$ 18,984,850$ Sales tax 23,008,606 21,556,336 19,165,963 18,655,801 Taxes - other 3,027,357 2,459,912 2,118,567 1,939,217 Franchise taxes 4,973,295 4,926,315 4,925,043 4,478,899 Investment income 731,135 398,206 201,492 169,477 Other 164,835 - 82,963 36,854 Transfers 9,188,144 10,371,215 4,904,089 7,615,607 Total governmental activities 65,828,202$ 62,527,190$ 52,048,231$ 51,880,705$ Business-type activities Investment income 544,050$ 271,508$ 167,866$ 98,015$ Gain on sale of capital assets - - - - Extraordinary item Other - - - - Transfers (9,188,144) (10,371,215) (4,904,089) (7,615,607) Total business-type activities (8,644,094) (10,099,707) (4,736,223) (7,517,592) Total primary government 57,184,108$ 52,427,483$ 47,312,008$ 44,363,113$ CHANGES IN NET POSITION Governmental activities 21,165,711$ 23,454,635$ 25,117,087$ 28,629,321$ Business-type activities 29,754,542 30,761,639 18,424,347 78,164,108 Total primary government 50,920,253$ 54,216,274$ 43,541,434$ 106,793,429$ 139 2013 2012 2011 2010 2009 2008 17,037,036$ 15,751,826$ 14,362,895$ 14,360,142$ 14,934,694$ 12,610,638$ 17,002,757 15,045,592 14,148,242 13,482,999 12,543,071 13,236,686 1,331,281 1,143,217 1,100,490 1,000,571 278,982 1,134,493 4,471,487 3,924,052 3,874,815 2,603,222 2,801,666 2,739,567 241,449 230,788 187,314 140,384 504,145 2,222,952 1,129,389 710,403 590,398 537,528 3,415,713 803,334 11,719,799 6,511,026 6,871,447 6,637,964 8,184,258 7,129,529 52,933,198$ 43,316,904$ 41,135,601$ 38,762,810$ 42,662,529$ 39,877,199$ 126,322$ 156,329$ 171,947$ 133,132$ 667,389$ 1,018,860$ - - - - - - 4,919,258 4,003,968 2,971,392 2,835,458 2,580,006 2,295,472 (11,719,799) (6,511,026) (6,871,447) (6,637,964) (8,184,258) (7,129,529) (6,674,219) (2,350,729) (3,728,108) (3,669,374) (4,936,863) (3,815,197) 46,258,979$ 40,966,175$ 37,407,493$ 35,093,436$ 37,725,666$ 36,062,002$ 19,809,829$ 7,998,978$ 6,552,727$ 4,780,366$ 8,635,049$ 12,192,214$ 10,247,276 9,747,281 7,328,408 12,235,504 24,591,049 16,329,198 30,057,105$ 17,746,259$ 13,881,135$ 17,015,870$ 33,226,098$ 28,521,412$ City of Georgetown, Texas Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 140 2017 2016 2015 2014 2013 2012 2011 General fund Nonspendable 246,648$ 507,929$ 66,702$ 22,810$ 18,697$ 2,110$ 9,061$ Committed Contingency 7,925,000 7,925,000 7,695,000 7,500,000 7,400,000 7,000,000 6,847,000 Economic stability 1,150,000 - - - - - - Benefit payout 222,000 - - - - - - Assigned Encumbrances 919,906 1,502,188 1,835,134 1,755,953 1,631,482 1,210,247 1,403,968 Unassigned 2,862,071 2,561,845 2,407,019 2,893,916 3,999,924 2,419,053 1,894,618 Total general fund 13,325,625$ 12,496,962$ 12,003,855$ 12,172,679$ 13,050,103$ 10,631,410$ 10,154,647$ Other governmental funds Restricted Debt service 1,938,926$ 1,867,190$ 1,489,314$ 1,268,186$ 1,109,220$ 1,749,324$ 1,976,586$ Bond funds 17,258,365 23,602,097 15,336,646 14,840,447 15,438,897 18,112,419 17,748,555 Hotel/motel tax 853,337 499,231 544,252 579,118 515,525 526,488 460,582 Street maintenance tax 3,422,465 2,388,379 2,534,655 2,773,940 5,029,263 4,205,153 3,215,322 Other purposes 762,196 692,834 344,436 352,032 188,072 244,969 306,926 Committed Other capital projects 11,556,682 10,985,484 8,489,829 12,386,987 12,292,845 8,770,010 10,682,665 Nonmajor funds 5,405,555 3,324,663 4,202,843 4,009,871 2,174,368 2,293,194 1,899,631 Assigned Encumbrances 22,456,924 26,160,650 7,606,841 13,385,685 25,444,232 8,891,080 6,105,133 Unassigned (495,350) (105,707) (663,535) - - - - Total all other governmental funds 63,159,100$ 69,414,821$ 39,885,281$ 49,596,266$ 62,192,422$ 44,792,637$ 42,395,400$ Note: City of Georgetown first applied GASB Statement No. 54 in fiscal year 2011; therefore, the new fund balance distinctions for years prior to fiscal year 2011 are not available. 141 2010 2009 2008 General fund Reserved 1,160,195$ 1,001,111$ 955,743$ Unreserved 8,601,923 9,506,572 10,986,752 Total general fund 9,762,118$ 10,507,683$ 11,942,495$ Other governmental funds Reserved 30,050,627$ 29,932,873$ 10,889,998$ Unreserved, reported in Special revenue funds - - - Capital projects funds - - 18,173,048 Total all other governmental funds 30,050,627$ 29,932,873$ 29,063,046$ City of Georgetown, Texas Changes In Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 142 2017 2016 2015 2014 REVENUES Property taxes 24,661,683$ 24,052,103$ 21,638,850$ 19,921,148$ Property assessment 1,447,839 1,224,108 1,082,465 1,017,316 Sales tax and other taxes 24,588,124 21,556,336 19,165,963 18,655,801 Franchise taxes 4,973,295 4,926,315 4,925,043 4,478,899 Licenses and permits 2,652,279 2,113,126 2,002,380 1,932,563 Charges for service 14,273,666 12,512,232 10,671,299 9,762,561 Fine and forfeitures 500,577 525,510 586,853 668,566 Donations and grants 5,231,886 6,852,346 1,435,279 8,236,215 Investment income 672,070 356,761 172,952 152,252 Other revenue 1,875,015 3,207,387 2,106,152 1,474,961 Total revenues 80,876,434 77,326,224 63,787,236 66,300,282 EXPENDITURES Culture / recreation 11,362,281 11,144,256 10,448,536 9,613,918 Development 2,517,985 5,565,942 2,322,321 2,299,379 Fire services 14,848,470 13,823,467 11,513,926 9,748,456 General government 4,791,467 3,361,740 4,115,280 3,412,293 Highways and streets 6,992,059 7,794,109 6,075,407 8,810,437 Police 14,737,071 13,876,795 13,010,497 11,875,081 Environmental services 6,328,860 5,951,829 5,703,227 5,092,327 Capital outlay 39,219,989 23,482,464 24,006,253 32,164,540 Debt service Principal retirement 10,372,836 8,860,415 7,868,518 7,765,414 Interest and fiscal charges 5,808,925 4,931,447 4,595,331 4,449,327 Total expenditures 116,979,943 98,792,464 89,659,296 95,231,172 Excess (deficiency) of revenues over expenditures (36,103,509) (21,466,240) (25,872,060) (28,930,890) OTHER FINANCING SOURCES (USES) Transfers in 15,963,898 14,712,268 10,972,315 12,570,645 Transfers out (10,046,733) (7,421,944) (9,313,269) (7,506,242) Premiums on issuance of bonds 1,799,286 1,831,554 1,001,947 - Sale of property - - - 3,550,000 Payment to refunding escrow agent - (7,877,733) (14,098,445) (11,911,063) Bonds issued 22,960,000 50,244,742 27,429,703 18,753,970 Total other financing sources (uses)30,676,451 51,488,887 15,992,251 15,457,310 NET CHANGE IN FUND BALANCES (5,427,058)$ 30,022,647$ (9,879,809)$ (13,473,580)$ Debt service as a percentage of noncapital expenditures 20.8%18.3%19.0%19.4% 143 2013 2012 2011 2010 2009 2008 17,197,460$ 15,883,636$ 14,591,564$ 14,572,432$ 14,169,419$ 12,703,509$ 387,290 353,269 313,093 262,060 278,982 210,659 17,790,450 15,698,207 14,724,741 13,987,624 13,289,438 14,000,228 4,471,487 3,924,052 3,874,815 2,603,222 2,801,666 2,739,567 1,536,660 1,236,478 890,948 841,392 791,882 1,158,433 9,479,669 8,493,243 8,199,073 8,157,465 7,687,489 2,289,493 739,556 682,760 810,950 1,060,361 981,228 1,110,815 3,979,292 1,687,184 4,121,625 3,078,392 2,058,301 298,803 212,629 230,788 187,313 140,384 737,755 2,222,952 2,960,559 2,870,008 1,735,082 1,585,584 1,897,179 2,823,254 58,755,052 51,059,625 49,449,204 46,288,916 44,693,339 39,557,713 9,262,282 8,377,084 8,229,049 7,773,346 7,535,763 6,325,780 1,626,315 2,155,243 2,195,537 2,088,809 2,213,899 2,454,810 8,804,938 8,253,567 7,725,794 6,909,597 6,597,024 5,380,247 3,144,173 3,178,251 3,595,481 3,288,185 3,324,758 3,038,876 3,422,340 5,061,214 6,044,755 5,171,678 3,840,312 2,768,367 11,677,968 10,577,384 10,221,220 10,026,352 10,137,983 9,222,704 4,857,396 4,823,170 4,321,888 4,199,433 4,285,345 - 16,760,621 15,938,457 12,604,835 8,930,286 12,444,569 21,622,846 6,452,644 5,533,987 4,998,369 4,791,550 4,478,467 3,495,684 3,771,791 4,094,247 3,686,318 3,642,426 3,608,738 4,480,504 69,780,468 67,992,604 63,623,246 56,821,662 58,466,858 58,789,818 (11,025,416) (16,932,979) (14,174,042) (10,532,746) (13,773,519) (19,232,105) 13,969,841 9,734,354 7,915,723 8,895,212 10,055,272 10,196,752 (4,331,850) (5,492,299) (2,654,379) (2,847,628) (3,367,769) (4,658,144) - - - - - - - - - - - 47,029 (11,356,689) (3,416,787) - - - - 32,562,592 18,981,711 21,650,000 3,857,351 6,575,000 4,395,000 30,843,894 19,806,979 26,911,344 9,904,935 13,262,503 9,980,637 19,818,478$ 2,874,000$ 12,737,302$ (627,811)$ (511,016)$ (9,251,468)$ 19.3%18.5%17.0%17.6%17.6%21.5% City of Georgetown, Texas Property Tax Rates, Levies and Collections Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 144 Interest and Current Percent Fiscal Tax General Sinking Total Tax of Levy Year Rate Fund Fund Tax Levy Collections Collected 2008 0.3566 0.2032 0.1534 13,156,096$ 12,744,960$ 96.87% 2009 0.3562 0.2005 0.1557 14,828,927 14,349,606 96.77% 2010 0.3562 0.2114 0.1448 15,142,165 14,653,346 96.77% 2011 0.3562 0.2199 0.1363 15,098,808 14,635,299 96.93% 2012 0.3875 0.2229 0.1646 16,444,180 16,050,914 97.61% 2013 0.4100 0.2364 0.1736 17,806,346 17,384,594 97.63% 2014 0.4395 0.2160 0.2235 19,697,573 19,270,107 97.83% 2015 0.4340 0.2074 0.2266 21,383,874 20,968,385 98.06% 2016 0.4340 0.2072 0.2268 23,803,581 23,354,913 98.12% 2017 0.4240 0.2180 0.2273 25,551,262 25,470,885 99.69% Source: City of Georgetown Tax Assessor. 145 Total Outstanding Collections Delinquent Delinquent as a Percent Outstanding Taxes as a Tax Total Tax of Current Delinquent Percent of Collections Collections Levy Taxes Current Levy 91,036$ 12,835,996$ 97.57% 320,807$ 2.44% 139,828 14,489,434 97.71% 339,493 2.29% 127,176 14,780,522 97.61% 361,643 2.39% 120,092 14,755,391 97.73% 343,417 2.27% 44,797 16,095,711 97.88% 349,082 2.12% 76,902 17,461,496 98.06% 344,851 1.94% 81,450 19,351,557 98.24% 346,016 1.76% 36,825 21,005,210 98.23% 378,664 1.77% 71,125 23,426,038 98.41% 377,543 1.59% (6,876) 25,464,009 99.66% 452,566 1.77% City of Georgetown, Texas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years 146 Personal Property Estimated Estimated Fiscal Assessed Actual Assessed Actual Year Value (1)Value Value (1)Value 2008 3,330,727,230$ 3,330,727,230$ 238,557,091$ 238,557,091$ 2009 3,769,863,117 3,769,863,117 244,892,514 244,892,514 2010 3,780,404,329 3,780,404,329 246,488,943 246,488,943 2011 3,786,177,221 3,786,177,221 269,771,730 269,771,730 2012 3,885,150,718 3,885,150,718 311,033,417 311,033,417 2013 4,033,324,389 4,033,324,389 382,683,621 382,683,621 2014 4,227,513,729 4,227,513,729 370,699,347 370,699,347 2015 4,801,066,109 4,801,066,109 326,852,517 326,852,517 2016 5,430,926,110 5,430,926,110 395,688,580 395,688,580 2017 6,547,754,115 6,547,754,115 542,912,696 542,912,696 Source: Williamson County Appraisal District Tax Assessor/Collector. (1) Net of exemptions. Real Property 147 Total Total Ratio of Total Estimated Direct Assessed Value Assessed Actual Tax to Total Estimated Value (1)Value Rate Actual Value 3,569,284,321$ 3,569,284,321$ 0.3566 100.00% 4,014,755,631 4,014,755,631 0.3562 100.00% 4,026,893,272 4,026,893,272 0.3562 100.00% 4,055,948,951 4,055,948,951 0.3562 100.00% 4,196,184,135 4,196,184,135 0.3875 100.00% 4,416,008,010 4,416,008,010 0.4100 100.00% 4,598,213,076 4,598,213,076 0.4395 100.00% 5,127,918,626 5,127,918,626 0.4340 100.00% 5,826,614,690 5,826,614,690 0.4340 100.00% 7,090,666,811 7,090,666,811 0.4240 100.00% City of Georgetown, Texas Property Tax Rates – Direct and Overlapping Governments (Per $100 of Assessed Value) Last Ten Fiscal Years 148 Debt Georgetown Fiscal General Service Total Independent Williamson Year Fund Fund City School District County Total 2008 0.20 0.15 0.35 1.29 0.47 2.11 2009 0.20 0.15 0.35 1.29 0.49 2.13 2010 0.21 0.14 0.35 1.29 0.49 2.13 2011 0.21 0.14 0.35 1.36 0.49 2.20 2012 0.22 0.16 0.38 1.40 0.49 2.27 2013 0.24 0.17 0.41 1.40 0.49 2.30 2014 0.22 0.22 0.44 1.40 0.49 2.33 2015 0.21 0.23 0.44 1.40 0.49 2.33 2016 0.21 0.23 0.44 1.40 0.48 2.32 2017 0.21 0.22 0.42 1.41 0.48 2.31 Source: Information furnished by respective tax assessors. City of Georgetown City of Georgetown, Texas Principal Property Taxpayers Current Year and Nine Years Ago 149 Percentage Percentage of Total of Total Type of Assessed Assessed Assessed Assessed Taxpayer Business Value Rank Value (1)Value Rank Value (1) Citicorp North America Development 116,019,544$ 11.64%-$ 0.00% Citigroup Technology Inc Development 87,000,000 21.23%- 0.00% WPG Wolf Ranch LP Development 75,941,409 31.07%62,498,544 11.75% Georgetown Rail and Equipment Transportation 42,818,693 40.60%- 0.00% The Bassham Trust Development 37,769,282 50.53%- 0.00% St. David's Healthcare Partners Hospital 36,055,613 60.51%37,634,524 21.05% Westinghouse Pointe Apts Apartments 31,673,048 70.45%- 0.00% Vantage At Georgetown LLC Apartments 31,154,590 80.44%- 0.00% Summary at Rivery Park LTD Development 27,223,036 90.38%- 0.00% Two Rivers GT Ltd Development 26,666,527 10 0.38%- 0.00% Del Webb Texas Ltd Development - 0.00%31,459,133 30.88% Stonehill Waters Edge Ltd Apartments - 0.00%24,942,050 40.70% Wal-Mart Real Estate Retail - 0.00%16,500,311 50.46% Hewlett Holdings, Ltd Automobile Dealer - 0.00%13,759,757 60.39% HE Butt Grocery Company Retail - 0.00%13,200,000 70.37% Republic Square K/C Ltd Development - 0.00%12,177,143 80.34% Inland Western Georgetown Rivery Development - 0.00%11,771,240 90.33% Target Corporation Retailer - 0.00%11,648,560 10 0.33% Total 512,321,742$ 7.23%235,591,262$ 6.60% Source: City Tax Assessor/Collector. (1) The total assessed valuation for the fiscal year ended September 30, 2017 was certified at $7,090,666,811. * Per certified roll. Does not include some major property owners whose property is under protest as of date of certification. 2017 2008 City of Georgetown, Texas Taxable Sales by Category Last Ten Fiscal Years 150 NAICS Sectors 2017*2016 2015 2014 Agriculture/Forestry/Fishing/Hunting -$ -$ -$ 448$ Mining, quarrying, oil & gas extraction - - - - Utilities 24,653,363 24,509,458 23,612,396 21,368,744 Construction 24,798,897 18,369,915 33,485,247 33,585,485 Manufacturing 82,046,181 7,590,482 5,902,324 5,486,476 Wholesale trade 24,816,039 21,912,478 16,065,173 14,122,397 Retail trade 525,453,413 552,269,512 514,459,509 468,668,683 Transportation, warehousing 3,219,999 2,159,562 1,202,760 1,316,100 Information 47,709,743 51,059,437 43,345,486 40,292,168 Finance, insurance 3,557,444 3,357,319 1,009,355 578,893 Real estate, rental, leasing 3,387,155 3,393,642 2,719,424 3,000,201 Professional, scientific, technical svcs 8,624,509 8,189,352 7,915,851 7,237,174 Management of companies, enterprises - 315,805 - - Admin, support, waste mgmt, remediation svcs 8,787,903 8,131,282 7,493,100 4,548,385 Educational svcs 479,225 538,758 349,784 344,038 Healthcare, social assistance 607,795 439,596 504,981 279,142 Arts, entertainment, recreation 13,139,889 12,251,028 12,529,599 11,347,603 Accommodation, food services 134,051,840 127,069,718 116,778,321 104,451,832 Other svcs (except public administration)27,870,439 26,724,994 28,398,634 28,483,626 Public administration 31,743 18,245 32,673 31,222 Other 2,613 - - - Total 933,238,189$ 868,300,583$ 815,804,617$ 745,142,617$ City direct sales tax rate 2.00%2.00%2.00%2.00% Source: Window on State Government - Glenn Hegar, Texas Comptroller of Public Accounts website. Amounts subject to sales tax have been restated by the state since the 2012 CAFR release. Notes: All reporting is by North American Industry Classification System (NAICS) sector. Standard Industrial Classification (SIC) Codes are no longer being assigned to taxpayers. *2017 is projected as 4th Quarter actuals were not in at time of update. 151 2013 2012 2011 2010 2009 2008 -$ 4,825$ -$ -$ -$ -$ - - - - 445,156 416,435 19,031,408 19,253,904 18,628,820 20,319,600 18,647,965 16,475,883 5,384,717 4,967,279 4,002,432 3,625,542 4,250,912 4,361,179 8,554,720 4,585,577 5,873,390 6,061,597 5,748,311 9,390,419 16,091,304 16,186,257 14,174,184 10,063,489 13,253,476 16,269,671 446,244,500 405,055,103 378,427,824 380,552,640 367,257,156 383,981,936 1,218,175 1,242,589 1,061,271 767,634 1,178,847 1,558,622 33,781,552 30,485,692 29,916,065 27,915,345 26,448,683 26,845,497 563,947 482,899 424,931 459,699 380,069 357,522 2,370,540 2,165,251 3,781,875 2,716,214 2,389,616 2,862,995 8,234,560 7,522,451 5,292,086 5,294,148 4,586,618 6,435,627 - - - - - - 4,190,713 3,601,364 3,359,965 3,464,947 3,141,955 3,658,966 359,795 372,185 154,882 28,427 46,588 40,108 213,183 308,645 444,834 389,729 283,517 221,776 11,787,222 11,914,044 11,362,973 10,983,705 10,424,729 9,975,461 97,227,191 86,308,956 81,339,685 76,959,382 75,006,166 74,477,233 24,097,238 18,603,403 16,990,190 15,102,925 14,421,211 14,341,106 53,482 20,023 31,428 34,518 33,271 24,072 - - 1,198 547 - 6,797 679,404,247$ 613,080,447$ 575,268,033$ 564,740,088$ 547,944,246$ 571,701,305$ 2.00%2.00%2.00%2.00%2.00%2.00% City of Georgetown, Texas Direct and Overlapping Sales Tax Rates Last Ten Fiscal Years 152 City Fiscal Direct State of Year Rate Texas 2008 2%6.25% 2009 2%6.25% 2010 2%6.25% 2011 2%6.25% 2012 2%6.25% 2013 2%6.25% 2014 2%6.25% 2015 2%6.25% 2016 2%6.25% 2017 2%6.25% Source: Information furnished by City of Georgetown. City of Georgetown, Texas Sales Tax Revenue Payers by Industry Fiscal Years 2017 and 2008 153 Number Percent Tax Percent NAICS Sectors of Filers of Total Liability of Total Agriculture/Forestry/Fishing/Hunting 30.18% -$ -$ 0.00% Mining, quarrying, oil & gas extraction 20.12% - - 0.00% Utilities 7 0.43%24,653,363 493,067 2.64% Construction 125 7.70%24,798,897 495,978 2.66% Manufacturing 104 6.40%82,046,181 1,640,924 8.79% Wholesale trade 60 3.69%24,816,039 496,321 2.66% Retail trade 538 33.13% 525,453,413 10,509,068 56.30% Transportation, warehousing 14 0.86%3,219,999 64,400 0.35% Information 35 2.16%47,709,743 954,195 5.11% Finance, insurance 11 0.68%3,557,444 71,149 0.38% Real estate, rental, leasing 32 1.97%3,387,155 67,743 0.36% Professional, scientific, technical svcs 154 9.48%8,624,509 172,490 0.92% Management of companies, enterprises 0.00%- - 0.00% Admin, support, waste mgmt, remediation svcs 94 5.79%8,787,903 175,758 0.94% Educational svcs 14 0.86%479,225 9,585 0.05% Healthcare, social assistance 30 1.85%607,795 12,156 0.07% Arts, entertainment, recreation 51 3.14%13,139,889 262,798 1.41% Accommodation, food services 189 11.64% 134,051,840 2,681,037 14.36% Other svcs (except public administration)145 8.93%27,870,439 557,409 2.99% Public administration 4 0.25%31,743 635 0.00% Other 12 0.74%2,613 52 0.00% Totals 1,624 100.00% 933,238,190$ 18,664,764$ 100.00% Number Percent Tax Percent NAICS Sectors of Filers of Total Liability of Total Agriculture/Forestry/Fishing/Hunting - 0.00% -$ -$ 0.00% Mining, quarrying, oil & gas extraction 5 0.39% 416,435 8,329 0.07% Utilities 7 0.54% 16,475,883 329,518 2.69% Construction 89 6.90%4,394,991 87,900 0.72% Manufacturing 80 6.21%9,397,281 187,946 1.53% Wholesale trade 58 4.50%16,269,671 325,393 2.66% Retail trade 457 35.45% 383,981,936 7,679,639 62.67% Transportation, warehousing 27 2.09%1,558,622 31,172 0.25% Information 30 2.33%26,845,497 536,910 4.38% Finance, insurance 8 0.62%347,522 6,950 0.06% Real estate, rental, leasing 24 1.86%2,862,995 57,260 0.47% Professional, scientific, technical svcs 104 8.07%6,435,627 128,713 1.05% Management of companies, enterprises 0.00%- - 0.00% Admin, support, waste mgmt, remediation svcs 92 7.14%3,625,154 72,503 0.59% Educational svcs 6 0.47%40,108 802 0.01% Healthcare, social assistance 15 1.16%221,776 4,436 0.04% Arts, entertainment, recreation 28 2.17%9,975,461 199,509 1.63% Accommodation, food services 136 10.55%74,470,272 1,489,405 12.15% Other svcs (except public administration)111 8.61%55,341,106 1,106,822 9.03% Public administration 5 0.39%15,072 301 0.00% Other 7 0.54%6,797 136 0.00% Totals 1,289 100.00% 612,682,206$ 12,253,644$ 100.00% Source: Window on State Government. Notes: The City direct sales tax rate for both 2017 and 2008 is 2%. Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the sources of the City's revenue. All reporting is now by North American Industry Classification System (NAICS) sectors. Standard Industrial Classification (SIC) Codes are no longer being assigned to taxpayers, and data on SIC filers is no longer available. *2017 is projected as 4th quarter actuals were not available at the time of update. 2017 * 2008 City of Georgetown, Texas Ratios of Outstanding Debt by Type Last Ten Fiscal Years 154 General Sales Tax General Fiscal Obligation Revenue Capital Revenue Obligation Year Bonds Bonds Leases Bonds Bonds 2008 69,970,050$ 11,115,000$ 12,831$ 57,280,000$ 4,984,950$ 2009 73,008,888 10,715,000 - 53,640,000 10,096,112 2010 72,532,310 10,300,000 - 59,825,000 13,777,690 2011 89,613,941 9,870,000 - 55,945,000 12,981,059 2012 100,356,664 9,420,000 - 51,425,000 11,618,336 2013 116,738,088 8,955,000 - 48,090,268 14,551,893 2014 116,200,602 8,470,000 - 61,885,000 13,884,399 2015 122,965,751 7,755,000 - 67,910,000 16,414,254 2016 154,191,338 7,225,000 - 72,545,000 15,286,384 2017 170,194,599 6,685,000 - 92,730,000 13,865,309 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Governmental Activities Business-Type Activities 155 Total Percentage Primary of Personal Per Government Income Capita 143,362,831$ 11.97%3,136$ 147,460,000 11.61% 3,152 156,435,000 11.56% 3,268 168,410,000 11.63% 3,444 172,820,000 11.97% 3,469 188,335,249 11.84% 3,728 200,440,001 11.15% 3,839 215,045,005 10.28% 3,786 249,247,722 10.25% 4,244 283,474,908 9.56% 4,675 City of Georgetown, Texas Ratios of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita Last Ten Fiscal Years 156 Taxable Assessed Gross Less Debt Fiscal Assessed Valuation Bonded Service Funds Year Population Value (1)Per Capital Debt (2)Available 2008 45,710 3,569,284,321$ 78,085$ 74,955,000$ 1,224,087$ 2009 46,787 4,014,755,631 85,809 83,105,000 2,530,149 2010 47,865 4,026,893,772 84,130 86,310,000 2,274,235 2011 48,902 4,055,948,951 82,940 102,595,000 1,976,586 2012 49,543 4,196,184,135 84,698 111,975,000 1,749,324 2013 50,513 4,416,008,010 87,423 131,190,000 1,109,220 2014 52,214 4,598,213,076 88,065 130,085,001 1,268,186 2015 56,798 5,127,918,626 90,283 139,380,005 1,489,313 2016 58,723 5,838,074,672 99,417 169,477,722 1,867,190 2017 60,642 7,090,666,811 116,927 184,059,908 1,946,870 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Net of exemptions. (2) Includes all long-term general obligation debt. (3) Less debt service funds available. Sources: WCAD 157 Ratio of Net Ratio of Gross Net Bonded Debt Bonded Debt Net Bonded Total Bonded Bonded to Assessed to Assessed Debt Per Debt Per Debt Value (3)Value (3)Capita (3)Capita (3) 52,564,440$ 1.47%2.07%1,150$ 1,613$ 54,882,326 1.37%2.01%1,173 1,722 55,291,719 1.37%2.09%1,155 1,756 73,396,051 1.81%2.48%1,501 2,058 83,698,631 1.99%2.63%1,689 2,225 101,604,245 2.30%2.95%2,011 2,575 128,816,815 2.80%2.80%2,467 2,467 137,890,692 2.69%2.69%2,428 2,428 167,610,532 2.87%2.87%2,854 2,854 182,113,038 2.57%2.57%3,003 3,003 City of Georgetown, Texas Computation of Direct and Estimated Overlapping Bonded Debt Last Ten Fiscal Years 158 Per Taxing Body Amount As of Percent Amount Capita (1) ESTIMATED OVERLAPPING DEBT Georgetown I.S.D.349,840,000$ 06/30/2017 96.26% 336,745,989$ 5,553$ Williamson County 1,123,462,067 09/30/2017 10.36% 116,380,628 1,919 Total estimated overlapping debt 1,473,302,067 30.76% 453,126,616 7,471 DIRECT DEBT - City of Georgetown 184,059,908 09/30/2017 100.00% 184,059,908 3,035 DIRECT AND ESTIMATED OVERLAPPING DEBT 1,657,361,975$ 637,186,524$ 10,506$ RATIO OF DIRECT AND OVERLAPPING TAX SUPPORTED DEBT TO TAXABLE ASSESSED VALUATION Source: Jurisdiction listed. (1) GISD population - 63,000 (estimate) Williamson County population - 585,398 City of Georgetown population - 60,642 (2) Information represents the share of the respective debt which are obligations of the citizens of the City of Georgetown Debt City's Share (2) 159 This page intentionally left blank. City of Georgetown, Texas Computation of Legal Debt Margin Last Ten Fiscal Years 160 2017 2016 2015 2014 2013 DEBT LIMIT 79,770,002$ 65,678,340$ 57,689,085$ 51,729,897$ 49,680,090$ Total net debt applicable to limit (1)10,354,174 9,082,545 6,652,866 6,521,597 8,570,145 LEGAL DEBT MARGIN 69,415,828$ 56,595,795$ 51,036,219$ 45,208,300$ 41,109,945$ Total net debt applicable to limit as a percentage of debt limit 12.98% 13.83% 11.53% 12.61%17.25% ASSESSED VALUATION 2017 7,090,666,811$ Allowable tax levy for annual debt service purpose: $1.25 per $100 of assessed valuation, assuming 90% collection rate 79,770,002$ 2017 annual debt service requirements for general obligation debt: Principal 10,354,174 Interest and fiscal charges 5,233,180 15,587,354 Legal margin for annual debt service requirements 64,182,648$ NOTE: All taxable property within the City is subject to the assessment levy and collection by the City of a continuing, direct annual ad valorem tax sufficient to provide for the payment of principal and interest on the Bonds within the limits prescribed by law. Article XI, Section 5, of the Texas Constitution is applicable to the City, and limits the maximum ad valorem tax rate to $2.50 per $100 assessed valuation (for all City purposes). The Charter of the City adopts the provisions of the constitution without further limitation. Under rules promulgated by the Office of the Attorney General of Texas, such office will not approve tax bonds of the City unless the City can demonstrate its ability to pay debt service requirements on all outstanding City tax bonds, including the issue to be approved, from a tax levy of $1.25 per $100 of valuation, based on 90% collection of tax. (1) The legal margin computation includes the general obligation debt that will be repaid by self-supporting sources such as the Airport, Stormwater Drainage and Georgetown Transportation Enhancement Corporation (GTEC) funds. 161 2012 2011 2010 2009 2008 47,207,072$ 45,629,426$ 45,302,549$ 45,166,001$ 40,154,449$ 7,350,236 8,640,634 8,043,904 7,664,261 7,614,171 39,856,836$ 36,988,792$ 37,258,645$ 37,501,740$ 32,540,278$ 15.57% 18.94% 17.76% 16.97% 18.96% City of Georgetown, Texas Revenue Bond Coverage Utility Funds (1) Last Ten Fiscal Years 162 Operating Expenses Net Revenue Fiscal Eligible Interest (Excluding Available for Year Revenues Earnings Depreciation) Debt Service 2008 78,404,586$ 955,680$ 57,922,907$ 21,437,359$ 2009 83,485,213 392,080 58,695,917 25,181,376 2010 84,948,916 116,458 59,828,974 25,236,400 2011 88,605,410 159,888 65,271,517 23,493,781 2012 89,907,801 144,460 66,531,990 23,520,271 2013 86,876,459 118,277 58,803,394 28,191,342 2014 93,979,191 93,850 72,927,251 21,145,790 2015 106,686,101 164,921 78,010,309 28,840,713 2016 112,401,358 263,279 82,451,857 30,212,780 2017 126,705,643 529,545 91,766,018 35,469,170 Source: Finance and Administration Division. Notes: (1) Electric, Water, and Wastewater only. 163 Debt Service Requirements Interest and Times Principal Fiscal Charges Total Coverage 3,200,000$ 2,631,311$ 5,831,311$ 3.68 3,640,000 2,338,048 5,978,048 4.21 3,935,000 2,065,384 6,000,384 4.21 3,880,000 1,859,107 5,739,107 4.09 4,255,000 1,742,974 5,997,974 3.92 3,970,000 1,963,653 5,933,653 4.75 4,716,977 2,231,375 6,948,352 3.04 5,421,104 2,100,147 7,521,251 3.83 5,227,329 2,738,792 7,966,121 3.79 5,845,826 2,931,943 8,777,769 4.04 City of Georgetown, Texas Utility System Condensed Statement of Operations (1) For the Last Ten Fiscal Years 164 2017 2016 2015 2014 2013 REVENUES Water System 37,776,171$ 34,861,125$ 26,358,532$ 24,953,208$ 24,930,408$ Electric System 65,001,374 61,570,922 60,870,094 58,017,664 53,780,319 Miscellaneous 5,661,272 5,107,307 14,746,510 4,997,415 4,888,117 Interest Earnings 529,545 263,279 164,921 93,850 118,277 Total revenues 108,968,362 101,802,633 102,140,057 88,062,137 83,717,121 EXPENSES (1) Water System 21,485,743 13,520,486 11,885,339 8,561,671 7,737,541 Electric System 16,712,384 14,623,945 8,259,062 7,056,224 7,265,433 Utility Contracts 53,567,891 51,999,930 55,419,233 55,147,284 43,800,420 Total expenses 91,766,018 80,144,361 75,563,634 70,765,179 58,803,394 NET AVAILABLE FOR DEBT SERVICE 17,202,344$ 21,658,272$ 26,576,423$ 17,296,958$ 24,913,727$ Notes: (1) Excluding depreciation costs & plant management cost (2) Electric, Water & Wastewater only Information prov ided to comply with continuing disclosure requirements of SEC Rule 15c2-12. Average Annual Principal and Interest Requirements, 2018-2037 6,258,706$ Coverage of Average Requirements by Fiscal Year 2017 Net Income 2.75 Maximum Principal and Interest Requirements, 2018 9,700,297$ Coverage of Maximum Requirements by Fiscal Year 2017 Net Income 1.77 165 2011 2010 2009 2008 25,896,644$ 20,632,604$ 22,200,768$ 21,424,897$ 57,694,311 59,058,745 56,154,879 51,833,477 2,927,695 2,789,797 2,779,486 5,146,212 159,888 116,458 392,080 955,680 86,678,538 82,597,604 81,527,213 79,360,266 7,708,924 6,677,890 6,875,473 6,249,197 5,554,896 4,821,255 5,270,740 1,230,199 52,007,697 48,329,829 46,549,704 50,443,511 65,271,517 59,828,974 58,695,917 57,922,907 21,407,021$ 22,768,630$ 22,831,296$ 21,437,359$ City of Georgetown, Texas Utility System Condensed Statement of Operations (2) For the Last Ten Fiscal Years 166 2017 2016 2015 2014 2013 Utility system (1)525,643,929$ 494,823,457$ 457,712,841$ 424,822,231$ 338,199,636$ Less: accumulated depreciation (133,268,971) (121,636,964) (110,006,443) (99,974,691) (91,339,365) Net value of system 392,374,958 373,186,493 347,706,398 324,847,540 246,860,271 Plus: Construction fund 7,358,762 12,759,150 5,468,908 4,910,605 12,193,462 Net plant 399,733,720 385,945,643 353,175,306 329,758,145 259,053,733 Plus: Working capital 93,642,260 62,636,620 65,108,279 51,655,164 35,992,864 Total 493,375,980 448,582,263 418,283,585 381,413,309 295,046,597 Revenue bond debt (2)99,715,131 84,655,583 79,967,207 74,051,097 59,028,078 CITY'S EQUITY IN SYSTEM 393,660,849$ 363,926,680$ 338,316,378$ 307,362,212$ 236,018,519$ PERCENTAGE CITY'S EQUITY IN SYSTEM 79.79%81.13%80.88%80.59%79.99% Notes: (1) Electric, Water and Wastewater funds only (2) Changes in bond ordinances no longer require reservation of interest and sinking or reserve funds for utility revenue debt. Information provided to comply with continuing disclosure requirements of SEC Rule 15c2-12. 167 2012 2011 2010 2009 2008 313,923,709$ 306,424,774$ 286,216,930$ 273,482,065$ 251,560,756$ (82,719,027) (76,797,760) (67,645,584) (58,659,325) (53,420,721) 231,204,682 229,627,014 218,571,346 214,822,740 198,140,035 22,866,932 11,692,027 14,038,615 10,101,805 5,280,337 254,071,614 241,319,041 232,609,961 224,924,545 203,420,372 33,419,764 35,700,091 40,784,075 27,713,059 29,899,639 287,491,378 277,019,132 273,394,036 252,637,604 233,320,011 59,050,004 64,540,000 68,809,999 59,589,999 57,280,000 228,441,374$ 212,479,132$ 204,584,037$ 193,047,605$ 176,040,011$ 79.46%76.70%74.83%76.41%75.45% City of Georgetown, Texas Demographic and Economic Statistics Last Ten Fiscal Years 168 Per Capita Fiscal Personal Personal School Unemployment Year Population Income Income Enrollment Rate 2008 45,710 1,715,907,690$ 37,539$ 10,000 4.10% 2009 46,787 1,711,983,117 36,591 10,000 4.10% 2010 47,865 1,808,004,645 37,773 10,300 5.84% 2011 48,902 1,959,356,434 40,067 10,470 7.08% 2012 49,543 2,090,070,541 42,187 10,396 7.08% 2013 50,513 2,097,602,838 41,526 10,396 5.70% 2014 52,214 2,234,028,204 42,786 10,582 5.30% 2015 56,798 2,211,600,524 38,938 10,924 3.70% 2016 59,134 2,572,210,732 43,498 11,452 4.00% 2017 60,642 2,709,423,918 44,679 11,444 2.90% Sources: Population: City of Georgetown Planning and Development Division. Per Capita Personal Income: U.S. Dept. of Commerce / Bureau of Economic Analysis School Enrollment: Georgetown Independent School District. Unemployment Rate: Texas Workforce Commission, Labor Market and Career Information TRACER. Notes: Per capita personal income is for Williamson County and reflects estimates available as of Nov 17, 2017. Population for 2017 reflects city's population estimate for month ending Sep 30, 2017. Personal income calculated using city's population estimate and per capita income data. Unemployment rate reflects estimate for month ending Sep 30, 2017. City of Georgetown, Texas Principal Employers Current Year and Nine Years Ago 169 Percentage Percentage of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Williamson County Govt 1,603 1 2.74% 1,550 2 3.41% Georgetown ISD 1,543 2 2.63% 1,575 1 3.47% City of Georgetown 757 3 1.29%528 4 1.16% Airborn, Inc 500 4 0.85%300 6 0.66% St. David's Hospital 485 5 0.83%600 3 1.32% Southwestern University 450 6 0.77%450 5 0.99% Wesleyan Homes 355 7 0.61%233 9 0.51% Caring Home Health 269 8 0.46%- 0.00% Lone Star Circle of Care 201 9 0.34%- 0.00% Sun City (Del Webb)170 10 0.29%260 7 0.57% Walmart - 0.00%240 8 0.53% Texas Crushed Stone - 0.00%225 10 0.50% Totals 6,333 10.81% 5,961 12.63% Source: Economic Development Department 2017 2008 City of Georgetown, Texas Full Time Equivalent City Government Employees by Function Last Ten Fiscal Years 170 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Function General Government Culture & Recreation Administration 2 - 5 4 4 3 - - - - CVB 5 - - - - - - - - - Parks 20 21 22 21 21 23 23 23 23 23 Recreation 23 27 42 39 39 39 39 37 37 28 Rec. Programs 6 6 4 4 4 3 3 3 3 4 Library 24 23 22 22 22 23 22 22 22 22 Development Administration - - - - - - 2 2 2 - Planning 11 10 9 8 8 11 11 11 14 13 Current Planning - - - - - - - - - - Long Range Planning - - - - - - - - - - Inspection Svcs.14 13 10 10 10 12 13 13 13 13 Code Enforcement 5 5 5 4 4 4 6 6 6 6 Environmental Environmental Svcs.1 1 1 1 1 1 1 1 1 - Fire Services Fire Based Paramedic Program 19 15 15 - - - - - - - Support Svcs.14 14 13 7 6 7 6 6 6 6 Emergency Svcs.88 84 81 86 84 84 81 81 72 66 General Government General Government 3 2 3 2 2 2 2 - - - City Secretary 5 5 5 4 - - - - - - City Council - - - - 3 3 2 2 2 2 City Manager's Office 10 10 4 5 6 4 6 6 8 8 Highways / Streets Transportation Admin.4 2 3 3 2 2 1 3 3 3 Streets 19 19 19 19 19 19 19 19 19 16 Police Services Administration 4 4 4 4 4 5 5 9 10 8 Support Svcs.- - - - - - - - 34 36 Field Operations 106 103 102 98 98 99 99 95 60 60 Animal Svcs.11 11 11 11 9 9 9 8 8 8 Municipal Court 7 7 7 7 6 7 7 7 7 7 Fleet Services 9 9 8 8 8 7 6 6 6 6 Facilities Maintenance 7 7 7 7 6 7 7 7 7 7 Information Technology 22 18 18 16 13 13 13 13 11 11 Joint Svcs.104 101 92 87 82 78 76 74 69 62 Water 58 51 37 19 19 19 20 18 15 13 Sewer 7 7 14 14 14 14 14 12 12 12 Electric 67 73 60 57 54 49 44 47 48 42 Other Enterprises 15 14 13 13 11 11 11 11 11 12 Total 690 658 632 575 555 553 544 540 527 492 Source: City Finance & Administration Division. Notes: A full-time employee is scheduled to work 2,080 hours per year (including vacation and sick leave). Full-time equivalent employment is calculated by dividing total labor hours by 2,080. 171 This page intentionally left blank. City of Georgetown, Texas Operating Indicators by Functions Last Ten Fiscal Years 172 Function 2017 2016 2015 2014 2013 Culture and recreation Recreation Center memberships 12,433 12,944 11,604 9,901 10,678 CVB number of visitor inquiries 75,302 69,108 55,156 54,188 50,617 Library Circulation 533,602 513,725 527,987 559,209 550,683 Number of patrons added 3,529 3,818 3,428 2,161 2,446 Economic Development Number of proposals generated 62 51 56 44 48 Community Development Inspections/Code Enforcement Number of inspections 41,834 40,500 31,828 29,818 30,282 New residential permits issued 728 703 718 701 777 New commercial permits issued/TFO/Industrial 85 66 92 92 61 Number of code enforcement violations 8,702 13,784 14,052 16,213 15,225 Planning and Development Services Development applications filed 408 385 373 370 313 Annexations (in acres)649 246 2,022 152 161 Fire Services Number of calls for service 9,362 8,510 7,084 6,250 6,153 General Govt Bond rating - S&P AA+ AA+ AA+ AA+ AA+ City Manager's Office Number of public information requests processed 1,589 1,290 1,129 871 678 Police Services Number of calls for service 25,803 24,704 24,744 23,044 22,747 Number of traffic accidents 2,145 2,156 2,091 1,940 1,888 Animal Services Number of pets impounded 1,533 1,891 1,889 1,860 1,664 Number of adoptions 1,028 872 983 904 690 Municipal Court Number of court cases 4,797 4,905 5,641 7,658 7,833 Number of warrants served 225 278 374 349 398 Utility Office Number of utility customers 43,281 40,372 38,450 28,400 27,559 Water Number of new connects 2,351 1,532 1,909 1,455 909 Average daily water treated (million gallons)19 13 16 16 16 Average daily consumption (million gallons)16 16 16 13 13 Sewer Number of new connects 2,006 1,221 1,154 1,295 955 Average daily wastewater treated (million gallons)4 5 5 4 4 Electric kWhs consumed 621,464,114 605,019,836 590,029,360 565,518,133 544,339,879 Number of new connects 581 315 1,230 598 484 AMR Total number of work orders completed 3,677 3,223 1,489 1,554 1,113 Total reads by AMR 18,282 694,802 568,896 542,058 616,296 Other Enterprises Stormwater & Drainage Number of detention ponds cleaned 552 456 454 422 404 Number of work orders 233 242 489 530 710 Airport Gallons of fuel sold 866,833 778,328 636,128 648,065 565,851 Sources: Various City departments and City-Monthly Activity Indicators Report. 173 2012 2011 2010 2009 2008 13,769 16,044 16,778 18,497 5,487 42,901 35,749 27,086 38,669 45,044 552,032 527,746 524,610 496,603 431,294 2,526 2,184 2,293 2,338 2,514 38 36 31 40 35 21,270 18,383 20,192 21,248 33,198 664 509 550 523 768 89 97 115 127 77 11,535 11,090 12,295 13,179 10,570 290 284 158 246 344 61 703 276 1,005 369 5,706 5,674 5,649 5,475 5,321 AA+AA+AA+AA+AA 759 835 997 887 801 23,018 22,161 31,908 34,192 51,033 1,679 1,525 1,743 1,750 1,837 1,670 1,560 1,477 1,256 1,500 822 686 601 560 614 7,347 8,902 13,778 13,333 13,275 313 587 693 774 748 26,345 25,563 24,995 24,271 23,678 705 530 447 469 880 15 17 12 14 16 13 14 11 13 13 939 523 451 444 846 4 4 4 3 3 537,985,801 547,475,852 518,590,777 490,449,481 501,552,786 226 477 543 550 999 826 2,419 2,495 2,903 5,141 - - - - - 372 372 382 300 228 552 196 418 376 617 581,450 765,839 636,773 647,736 723,669 City of Georgetown, Texas Capital Assets by Functions Last Ten Fiscal Years 174 Function 2017 2016 2015 2014 2013 Culture and recreation Parks (developed acres)494 480 480 473 473 Recreation Centers 1 1 1 1 1 Senior Centers 1 1 1 1 1 Libraries 1 1 1 1 1 Fire Services Fire stations 5 5 5 5 5 Fire vehicles 36 36 34 29 25 Highways and streets Center line miles 326 324 312 310 310 Police Services Police stations 1 1 1 1 1 Police vehicles 91 88 84 84 87 Police motorcycle units 6 6 6 6 4 Electric Meters 25,607 24,881 24,147 22,918 22,660 Sources: Various City departments and City budget document. 175 2012 2011 2010 2009 2008 473 473 473 473 410 1 1 1 1 1 1 1 1 1 - 1 1 1 1 1 5 4 4 4 3 22 18 17 17 17 305 295 307 284 269 1 1 1 1 1 87 93 95 95 95 4 4 4 4 4 22,504 22,090 21,711 21,338 20,965 City of Georgetown, Texas Water Usage (Gallons) Last Ten Fiscal Years 176 Fiscal Average Year Day Peak Day Total Ended Usage Production Usage September 30,(000s) (000s) (000s) 2008 14,490 28,390 5,419,616 2009 11,290 25,870 5,011,889 2010 12,925 24,617 4,732,462 2011 14,024 26,778 5,955,541 2012 16,152 30,058 5,748,912 2013 15,976 28,818 5,121,278 2014 15,987 28,687 4,750,902 2015 15,875 35,394 5,794,201 2016 15,603 34,712 5,695,453 2017 15,815 38,003 5,772,395 Source: City of Georgetown City of Georgetown, Texas Ten Largest Water Customers(1) Fiscal Year Ended 2017 177 Water Usage% of Total Customer (1,000 Gallons) Water Usage CITY OF GEORGETOWN 55,926 0.97% SOUTHWESTERN UNIVERSITY 54,316 0.94% CITICORP OF N AMERICA, INC 45,242 0.78% WILLIAMSON COUNTY 36,607 0.63% GEORGETOWN ISD 36,223 0.63% SOUTHWEST MATERIALS 29,268 0.51% ST DAVID'S HOSPITAL 26,579 0.46% SUN CITY TX COMM ASSOC 23,639 0.41% WPG WOLF RANCH, LLC 23,383 0.41% CYPRESS CREEK @ RIVER BEND 21,750 0.38% TOTAL 352,933 6.11% Source: City of Georgetown Customer Care fiscal year 2017 figures. (1) Fiscal year 2017 figures. Based on total consumption of 5,772,395 kgals. City of Georgetown, Texas Daily Flow (Wastewater Treatment) Last Ten Fiscal Years 178 Fiscal Year Gallons 2008 3,370,000 2009 3,580,000 2010 4,188,000 2011 3,327,000 2012 3,594,000 2013 3,641,000 2014 4,260,000 2015 4,607,964 2016 4,871,523 2017 4,068,219 Source: City of Georgetown Average Daily Wastewater Flow City of Georgetown, Texas Ten Largest Wastewater Customers(1) September 30, 2017 179 Volume Customer (1,000 Gallons) % of Total CITICORP OF N AMERICA, IN 43,403 2.86% SOUTHWESTERN UNIVERSITY 40,518 2.67% WILLIAMSON COUNTY 28,963 1.91% GEORGETOWN ISD 25,572 1.68% ST DAVID'S HOSPITAL 22,583 1.49% CYPRESS CREEK APTS 19,487 1.28% GEORGETOWN PLACE APTS 15,305 1.01% INDIAN CREEK APTS 14,029 0.92% CITY OF GEORGETOWN 13,734 0.90% THE OAKS @ GTWN APTS 10,882 0.72% 234,476 15.43% Source: City of Georgetown (1) Fiscal 2017 figures. Based on total consumption of 1,519,830 kgals. City of Georgetown, Texas Valuation, Exemptions and Ad Valorem Tax Debt September 30, 2017 180 2016/17 Market Valuation Established by Williamson Central Appraisal District (excluding totally exempt property)7,434,602,232$ Less Exemptions/Reductions at 100% Market Value:343,935,421 2016/17 Taxable Assessed Valuation 7,090,666,811 City Funded Debt Payable from Ad Valorem Taxes (1)161,099,908$ The Bonds 8,555,000 The Certificates 14,405,000 Total Debt Payable from Ad Valorem Taxes (1)184,059,908 Interest and Sinking Fund (1,946,870) Net Debt Payable from Ad Valorem Taxes 182,113,038 Ratio of Net Tax Supported Debt to Taxable Assessed Valuation (1)2.94% 2017 Estimated Population - 60,642 Per Capita Taxable Assessed Valuation - $116,927 Per Capita Net Ad Valorem Tax Debt Payable from Ad Valorem Taxes - $3,003 NOTES: (1) Includes $5,451,755 of self-supporting debt, which is paid from storm water and airport revenues, and $25,250,194 of self-supporting debt, which is paid from the City's sales tax levied for economic development pursuant to an interlocal agreement with the City's Type B Corporation (GTEC). $8,413,554 of self-supporting debt is paid from electric revenues and water revenues and $1,590,000 of self-supporting debt is paid from advalorem tax revenues within the Rivery TIRZ. 181 This page intentionally left blank. City of Georgetown, Texas Taxable Assessed Valuations by Category Last Seven Fiscal Years 182 Category Amount % of Total Amount % of Total Real, Residential, Single-Family 5,269,955,833$ 67.22% 4,461,872,364$ 66.73% Real, Residential, Multi-Family 321,729,040 4.10% 244,374,369 3.65% Real, Vacant Lots/Tracts 113,986,653 1.45% 109,578,980 1.64% Real, Acreage (Land Only)413,248,527 5.27% 400,074,586 5.98% Real, Farm and Ranch Improvements 12,051,614 0.15% 10,959,024 0.16% Real, Commercial/industrial 1,090,806,455 13.91% 1,018,036,078 15.22% Real and Tangible, Personal, Utilities, Other 55,642,985 0.71% 39,895,007 0.60% Tangible Personal, Commercial 441,440,286 5.63% 294,660,363 4.41% Tangible Personal, Industrial 1,990,498 0.03%- 0.00% Tangible Personal, Other, Inventory 118,681,945 1.51% 107,456,924 1.61% Total Appraisal Value Before Exemptions 7,839,533,836$ 100.00% 6,686,907,695$ 100.00% Less: Total Exemptions/Reductions 992,751,144 848,833,023 Taxable Assessed Value 6,846,782,692$ 5,838,074,672$ Category Amount % of Total Amount % of Total Real, Residential, Single-Family 3,051,782,791$ 62.49% 2,951,917,721$ 62.66% Real, Residential, Multi-Family 134,630,205 2.76% 136,781,699 2.90% Real, Vacant Lots/Tracts 112,194,608 2.30% 117,503,406 2.49% Real, Acreage (Land Only)277,760,619 5.69% 280,860,043 5.96% Real, Farm and Ranch Improvements 7,749,074 0.16% 7,748,104 0.16% Real, Commercial/industrial 873,539,170 17.89% 827,031,630 17.55% Real and Tangible, Personal, Utilities, Other 47,029,662 0.96% 45,209,184 0.96% Tangible Personal, Commercial 315,920,307 6.47% 278,224,342 5.91% Tangible Personal, Industrial 2,281,333 0.05% 2,234,106 0.05% Tangible Personal, Other, Inventory 60,766,941 1.24% 63,594,310 1.35% Total Appraisal Value Before Exemptions 4,883,654,710 100.00% 4,711,104,545 99.99% Less: Total Exemptions/Reductions 687,470,575 655,155,594 Taxable Assessed Value 4,196,184,135$ 4,055,948,951$ Source: https://www.wcad.org/entity-portal/ "Certified Packet" Tangible Personal, Other, Inventory = M: "Tangible, Other"+O: "Real Inventory"+S: "Special Inventory" 2012 2011 2017 2016 183 Amount % of Total Amount % of Total Amount % of Total 3,919,149,977$ 66.57% 3,383,707,151$ 65.32% 3,212,802,019$ 64.13% 180,615,033 3.07% 141,539,008 2.73% 136,323,871 2.72% 107,717,396 1.83% 105,728,114 2.04% 110,691,837 2.21% 329,513,434 5.60% 274,265,523 5.29% 287,098,365 5.73% 10,841,218 0.18% 9,762,143 0.19% 9,458,303 0.19% 959,342,874 16.29% 852,941,178 16.46% 838,635,946 16.74% 51,686,900 0.88% 41,161,229 0.79% 45,546,793 0.91% 234,873,665 3.99% 294,627,224 5.69% 302,428,949 6.04% - 0.00% - 0.00%- 0.00% 93,708,389 1.59% 76,722,581 1.48% 67,225,632 1.34% 5,887,448,886$ 100.00% 5,180,454,151$ 100.00% 5,010,211,715$ 100.00% 759,530,260 582,241,075 594,203,705 5,127,918,626$ 4,598,213,076$ 4,416,008,010$ 2014 20132015 City of Georgetown, Texas Authorized but Unissued General Obligation Bonds September 30, 2017 184 Authorization Date Amount Amount Being Unissued Purpose Authorized Authorized Issued Used Balance Roads 11/04/2008 46,000,000$ 21,150,000$ -$ 24,850,000$ Parks & recreation 11/04/2008 35,500,000 18,710,000 - 16,790,000 Roads 05/09/2015 105,000,000 22,710,000 - 82,290,000 Total 186,500,000$ 62,570,000$ -$ 123,930,000$ 185 This page intentionally left blank. City of Georgetown, Texas General Fund Revenues and Expenditure History Last Ten Fiscal Years 186 2017 2016 2015 2014 2013 Revenues: Taxes 31,618,006$ 29,675,061$ 27,331,498$ 25,293,544$ 24,522,441$ Licenses and Permits 2,652,279 2,113,126 2,002,380 1,932,563 1,536,660 Charges for Services 11,838,632 10,676,249 10,556,447 9,682,702 9,302,816 Fines and Forfeitures 453,675 476,138 529,920 598,717 670,582 Miscellaneous and Interest 825,006 1,074,393 722,772 682,447 1,460,008 Total Revenues 47,387,598 44,014,967 41,143,017 38,189,973 37,492,507 Expenditures: General Government 4,436,866 3,237,092 3,762,714 3,013,544 2,908,971 Development Services 2,389,998 2,297,979 2,148,991 2,003,688 1,579,575 Parks and Recreation 9,552,133 9,447,132 9,156,876 8,401,551 7,945,906 Fire Services 12,500,721 11,806,803 10,595,388 9,455,714 8,638,166 Police Services 14,471,049 13,778,073 12,899,092 11,687,498 11,471,418 Georgetown Utility Systems / Streets 10,310,775 10,333,422 9,281,051 9,435,835 8,236,375 Total Expenditures 53,661,542 50,900,501 47,844,112 43,997,830 40,780,411 Excess (Deficiency) of Revenues Over Expenditures (6,273,944) (6,885,534) (6,701,095) (5,807,857) (3,287,904) Budgeted Transfers In 9,592,342 8,909,975 7,720,944 6,964,508 6,655,673 Budgeted Transfers Out (2,489,735) (1,531,334) (1,188,673) (2,034,075) (949,076) Net Increase (Decrease)828,663 493,107 (168,824) (877,424) 2,418,693 Fund Equity at Beginning of Year 12,496,962 12,003,855 12,172,679 13,050,103 10,631,410 Fund Equity at End of Year 13,325,625$ 12,496,962$ 12,003,855$ 12,172,679$ 13,050,103$ Source: City's Audited Financial Statements. Fiscal Year Ending September 30, 187 2012 2011 2010 2009 2008 22,013,241$ 21,335,893$ 19,336,126$ 18,508,353$ 18,214,532$ 1,236,478 890,948 841,392 791,882 1,158,433 8,268,169 8,082,889 7,882,093 7,682,367 2,193,590 616,815 762,923 958,792 889,367 1,013,699 579,060 614,138 515,814 930,774 1,872,238 32,713,763 31,686,791 29,534,217 28,802,743 24,452,492 2,992,852 3,384,950 3,087,317 3,129,127 2,738,903 1,890,481 2,195,537 2,088,809 2,213,899 2,411,971 7,183,369 7,289,676 6,902,305 6,677,760 5,564,579 7,590,667 7,011,366 6,694,350 6,597,024 5,271,624 10,498,193 10,060,311 9,897,919 9,873,237 8,915,180 8,247,315 7,347,201 6,623,628 6,524,677 2,768,367 38,402,877 37,289,041 35,294,328 35,015,724 27,670,624 (5,689,114) (5,602,250) (5,760,111) (6,212,981) (3,218,132) 6,200,518 6,079,801 6,356,907 6,515,884 6,687,060 (34,641) (85,022) (1,342,361) (1,737,715) (2,091,633) 476,763 392,529 (745,565) (1,434,812) 1,377,295 10,154,647 9,762,118 10,507,683 11,942,495 10,565,200 10,631,410$ 10,154,647$ 9,762,118$ 10,507,683$ 11,942,495$ Fiscal Year Ending September 30, City of Georgetown, Texas Municipal Sales Tax History Last Ten Fiscal Years 188 Fiscal Year % of Equivalent of Ended Total Ad Valorem Ad Valorem Per Tax September 30, Collected Tax Levy Tax Rate Capita Levy Rate 2008 7,310,027$ 55.40%0.1975 160 13,195,606$ 0.3566 2009 6,943,036 46.67%0.1662 148 14,877,893 0.3562 2010 7,454,806 50.14%0.1786 156 14,867,340 0.3562 2011 7,803,863 52.41%0.1867 160 14,889,961 0.3562 2012 8,277,502 49.10%0.1903 167 16,856,914 0.3875 2013 9,326,554 50.78%0.2082 185 18,367,332 0.4100 2014 10,984,723 53.24%0.2340 210 20,632,709 0.4395 2015 11,296,645 49.55%0.2150 199 22,799,091 0.4340 2016 12,679,188 54.22%0.2353 216 23,384,947 0.4340 2017 13,595,005 53.21%0.2256 232 25,551,262 0.4240 City of Georgetown, Texas Monthly and Volumetric Water Rates September 30, 2017 189 Customer Meter Size Inside City Outside City 5/8 inch $15.50 $18.50 3/4 inch 23.00 27.50 1 inch 38.50 46.00 1 1/2 inch 76.50 91.50 2 inch 122.50 146.50 3 inch 245.50 293.50 4 inch 383.50 458.50 6 inch 766.50 916.50 8 inch 1,226.50 1,466.50 Residential Water Rates 1,000 Gallons Volumetric Rate 0 - 10 $1.75 11 - 20 2.40 21 - 40 4.00 41 - 60 6.50 61 and over 8.50 Nonresidential Water Rates Cost per thousand gallons $2.40 Irrigation Meter, cost per thousand gallons 4.00 Source: City of Georgetown Note: Rates effective January 1, 2014 Customer Charge per Month City of Georgetown, Texas Monthly Wastewater Rates September 30, 2017 190 Net Monthly Rate: Flat Rate Inside City Limits:$30.65 per month* Flat Rate Outside City Limits:$35.20 per month* * Low income residential discount: 20% below current flat rate for qualifying households Net Monthly Rate: a. Inside City Limits 1. Customer Charge $46.35 per month* 2. Volumetric Charge*$2.35 per 1,000 gallons b. Outside City Limits 1. Customer Charge $53.30 per month 2. Volumetric Charge*$2.70 per 1,000 gallons Net Monthly Rate: a. Inside City Limits 1. Customer Charge $82.30 per month 2. Volumetric Charge*$2.35 per 1,000 gallons b. Outside City Limits 1. Customer Charge $94.65 per month 2. Volumetric Charge*$2.70 per 1,000 gallons Net Monthly Rate: a. Inside City Limits 1. Customer Charge $46.35 per month 2. Volumetric Charge*$3.70 per 1,000 gallons b. Outside City Limits 1. Customer Charge $53.30 per month 2. Volumetric Charge*$4.30 per 1,000 gallons Net Monthly Rate: a. Inside City Limits 1. Customer Charge $110.10 per month 2. Volumetric Charge*$2.35 per 1,000 gallons b. Outside City Limits 1. Customer Charge $126.60 per month 2. Volumetric Charge*$2.70 per 1,000 gallons *The volumetric charges are calculated using the actual water consumption billed per month. Source: City of Georgetown Notes: Rates effective October 1, 2016 Commercial Large Commercial High Strength Commercial Multifamily Residential and Small Commercial City of Georgetown, Texas Monthly Electric Rates September 30, 2017 191 All Customers Purchased Power Cost Adjustment: $0.0040 per kWh Transmission Cost of Service: $0.0019 per kWh Residential Sales Tax: 2.00% of total electric charges; outside City limits: None Commercial Sales Tax: 8.25% of total electric charges; outside City limits: 6.25% Residential Service Customer Charge: $20.00 per month Energy Charge: $0.0939 per kWh Small General Service Customer Charge: $45.00 per month Energy Charge: $0.0883 per kWh School Charge Customer Charge: $175.00 per month Energy Charge: $0.1131 per kWh Water & Wastewater Pumping Service Customer Charge: $165.00 per month Energy Charge: $0.0516 per kWh Large General Service Customer Charge:$20.00 per month Demand Charge:$8.45 per kWh (50 kW minimum) Energy Charge:$0.0713 per kWh Minimum Bill:$442.50 Industrial Customer Charge:$250.00 per month Demand Charge:$10.00 per kWh (500 kW minimum) Energy Charge:$0.0644 per kWh Minimum Bill:$5,250.00 Large Industrial Service Customer Charge:$350.00 per month Demand Charge:$7.50 per kWh (2000 kW minimum) Energy Charge:$0.0661 per kWh Minimum Bill:$15,350.00 Municipal Service Customer Charge:$125.00 per month Energy Charge:$0.0606 per kWh Minimum Bill:$125.00 Lighting Service High Pressure Sodium Municipal Street Retail Street 100 Watt per light (35 kWh)$8.50 per month $5.09 per month $5.26 per month 200 Watt per light (71 kWh)$14.50 per month $9.29 per month $9.75 per month 250 Watt per light (86 kWh)$16.70 per month $11.13 per month $11.64 per month 400 Watt per light (137 kWh)$23.50 per month $17.33 per month $18.17 per month Source: City of Georgetown Effective June 1, 2017 192 This page intentionally left blank. 193 Compliance Section 194 This page intentionally left blank. AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 1601 SOUTH MOPAC EXPRESSWAY, SUITE D250, AUSTIN, TX 78746 P: 512.609.1900 F: 512.609.1911 195 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards To the Honorable Mayor and Members of the City Council City of Georgetown, Texas We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Georgetown, Texas (the City), as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated February 28, 2018. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. City of Georgetown, Texas 196 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. WEAVER AND TIDWELL, L.L.P. Austin, Texas February 28, 2018 AN INDEPENDENT MEMBER OF BAKER TILLY INTERNATIONAL WEAVER AND TIDWELL, L.L.P. CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS 1601 SOUTH MOPAC EXPRESSWAY, SUITE D250, AUSTIN, TX 78746 P: 512.609.1900 F: 512.609.1911 197 Independent Auditor’s Report on Compliance for Each Major Federal Program and Report on Internal Control over Compliance in Accordance with the Uniform Guidance To the Honorable Mayor and Members of the City Council City of Georgetown, Texas Report on Compliance for Each Major Federal Program We have audited the City of Georgetown, Texas’ (the City’s) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended September 30, 2017. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the federal statutes, regulations, and terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2017. City of Georgetown, Texas 198 Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. We identified certain deficiencies in internal control over compliance, as described in the accompanying schedule of findings and questioned costs as item 2017-001, that we consider to be a material weaknesses. The City’s responses to the internal control over compliance findings identified in our audit are described in the accompanying corrective action plan. The City’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on the response. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. WEAVER AND TIDWELL, L.L.P. Austin, Texas February 28, 2018 City of Georgetown, Texas Schedule of Findings and Questioned Costs Year Ended September 30, 2017 199 Section 1. Summary of Auditor’s Results Financial Statements An unmodified opinion was issued on the financial statements. Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiencies identified that are not considered to be material weakness(es)? _ Yes X None reported Noncompliance material to financial statements noted? _Yes X No Federal Awards Internal control over major programs: Material weakness(es) identified? X Yes No Significant deficiencies identified that are not considered to be material weakness(es)? _ Yes X None reported An unmodified opinion was issued on compliance for major programs. Any audit findings disclosed that are required to be reported in accordance with Section 2 CFR 200.516(a)? _Yes X No Identification of major programs: 20.106 Airport Project Participation Agreement Dollar threshold used to distinguish between type A and type B programs? $750,000 Auditee qualified as low-risk auditee? _Yes X No Section 2. Financial Statement Findings None City of Georgetown, Texas Schedule of Findings and Questioned Costs - Continued Year Ended September 30, 2017 200 Section 3. Federal Award Finding Finding 2017-001 Federal Program Information: Airport Participation Agreement (CFDA 20.106). This is a repeat finding of 2014-01. Type of Finding: Material Weakness in Internal Control Over Compliance Criteria: In accordance with the Uniform Guidance, the auditee shall prepare a Schedule of Expenditures of Federal Awards (SEFA) to include all federal award amounts expended, properly identifying the Catalog of Federal Domestic Assistance (CFDA) numbers, and properly identify awards as belonging to clusters, as applicable. Condition: During the course of the audit, we identified awards not properly reported on the SEFA as to the amount expended during the current year. Context: The auditors noted this condition during the review of the SEFA and through confirmation procedures with pass-through agencies. Effect or Potential Effect: Federal expenditures were not properly recorded on the initial SEFA received. In order to properly select those programs which will be tested as major federal programs in accordance with the Uniform Guidance, the auditors require complete and accurate information to be reported on the SEFA. If not completed properly, this could lead to non-compliance for federal awards and possible financial statement misstatement. Cause: As a result of the expenditures incurred as part of the Airport Project Participation Agreement grant being incurred on behalf of the City by a state agency, the City did not properly identify all of the expenditures incurred for this grant. Recommendation: Annually, as a part of completing the SEFA, the City should communicate with all granting agencies to ensure that all federal awards have been properly included in the SEFA. Corrective Action Plan: See Section 5. City of Georgetown, Texas Schedule of Findings and Questioned Costs – Continued Year Ended September 30, 2017 201 Section 4. Schedule of Prior Audit Findings None City of Georgetown, Texas Schedule of Findings and Questioned Costs – Continued Year Ended September 30, 2017 202 Section 5. Corrective Action Plan Finding 2017-001 Planned Corrective Action: The City agrees with the finding. In response, City finance staff has updated their procedures to verify and report all expenditures on a quarterly basis to be reviewed by the Controller. Finance staff will also provide compliance and reporting training both to internal staff and to all departments that currently have or are applying for grants. Planned Implementation Date: March 31, 2018 Name of Contact Person: Elaine S. Wilson, Controller City of Georgetown, Texas Schedule of Expenditures of Federal Awards For the Fiscal Year Ended September 30, 2017 203 Federal Grantor/Federal Pass-Through Federal Pass-Through Grantor/CFDA Entity Identifying Program Program Title Number Number Expenditures Federal Awards Bureau of Justice Assistance Direct Program: Bulletproof Vest Program 16.607 2,867$ Total Bureau of Justice Assistance 2,867 Department of Transportation / Federal Highway Administration (FHWA) Passed through Texas Department of Transportation: Highway Planning and Construction 20.205 CSJ-2211-01-019 389,895 Total Department of Transportation / Federal Highway Administration (FHWA)389,895 Federal Aviation Administration Passed through Texas Department of Transportation-Aviation Division: Airport Project Participation Agreement 20.106 16MPGRGTN 139,622 Airport Project Participation Agreement 20.106 1514GRGTN 5,735,829 Total Federal Aviation Administration 5,875,451 U.S. Department of Homeland Security Passed through Federal Emergency Management Agency: Prehazard Mitigation 97.039 LPDM-PJ-06-TX-2008-011 254,712 Passed through Texas Department of Public Safety: Emergency Management Performance Grant 97.042 17TX - EMPG-1421 30,724 Total U.S. Department of Homeland Security 285,436 U.S. Department of Housing and Urban Development Passed through Williamson County: Community Development Block Grant 14.218 065P Georgetown 80,285 Total U.S. Department of Housing and Urban Development 80,285 Institute of Museum and Library Services Passed through from Texas State Library and Archives Commission: State Library Program 45.310 LS-00-16-0044-16 61,899 State Library Program 45.310 LS-00-16-0044-17 5,217 Total Institute of Museum and Library Services 67,116 Total Expenditures of Federal Awards 6,701,050$ 204 This page intentionally left blank. City of Georgetown, Texas Notes to the Schedule of Expenditures of Federal Awards For the Fiscal Year Ended September 30, 2017 205 Note 1. General The accompanying schedule of expenditures of federal awards presents the activity of all applicable federal awards of the City of Georgetown, Texas (the City). The City’s reporting entity is defined in Note 1 to the City’s financial statements. Federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included in the respective schedule. The City has not elected to use the 10% de minimis indirect cost rate. Note 2. Basis of Accounting The accompanying schedule of expenditures of federal awards is presented using the modified accrual basis of accounting, which is described in Note 1 to the City’s financial statements. Note 3. Relationship to Federal Financial Reports Grant expenditures reports as of September 30, 2017, which have been submitted to grantor agencies will, in some cases, differ slightly from amounts disclosed herein. The reports prepared for grantor agencies are typically prepared at a later date and often reflect refined estimates of year-end accruals. The reports will agree at termination of the grant, as the discrepancies noted are timing differences. 206